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The Canadian dollar strengthened against its U.S. counterpart on Monday to a more than 2-year high, as investors' appetite for riskier currencies surged following news of a promising coronavirus vaccine development.

At EST (1420 GMT), the Canadian dollar was trading 0.9% higher at 1.2934 to the greenback, or 77.32 U.S. cents. The currency’s strongest level of the session was 1.2928, its strongest since October 2018.

Pfizer Inc on Monday said its experimental vaccine was more than 90% effective in preventing COVID-19 based on initial data from a large study, a major victory in the fight against a pandemic that has killed over 1 million people, roiled the world’s economy and upended daily life.

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Pfizer and BioNTech are the first drugmakers to show successful data from a large-scale clinical trial of a coronavirus vaccine.

The news sent global stock markets and other risky assets soaring while safe-haven currencies such as the Japanese yen and the Swiss franc fell.

Risk sentiment was also supported by hopes of improved prospects for global trade after Democrat Joe Biden clinched the tightly-fought U.S. presidential election.

“The Canadian dollar smashed through the 1.30 mark this morning, gapping upward on a broad improvement in global risk appetite,” said Karl Schamotta, chief market strategist at Cambridge Global Payments.

"Biden’s win and news of a potential vaccine are unleashing the “animal spirits” that drive economic activity - by making citizens more likely to spend and businesses more likely to invest, growth could accelerate materially into the winter months," he said.

The loonie was further helped by a big surge in the price of oil, Canada’s largest export.

Oil jumped by almost 10% on Monday for its biggest daily gain in almost six months after news of the vaccine and on Saudi Arabia’s assurance that an OPEC+ oil output deal could be adjusted to balance the market.

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Canadian government bond yields were higher across the curve, with the 10-year up 8.7 basis points at 0.736%.

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