The Canadian dollar rose by two-thirds of a cent Friday following a better-than-expected Canadian GDP report and after Ben Bernanke assured markets that the Federal Reserve stood ready to take further steps to boost the U.S. economy.
The loonie closed at $1.0145 US, up 0.67 cents. It traded as high as $1.0150 US in the morning.
That strength made the loonie the best performer among all major currencies Friday.
The second-quarter GDP figures showed the Canadian economy grew at an annualized rate of 1.8 per cent — slightly beating the American economy's 1.7 per cent growth rate — thanks in large part to rising business investment.
Ninety minutes after the release of the GDP report, Fed chair Bernanke signalled that he was leaving the door open to another round of quantitative easing to stimulate the sluggish U.S. economy.
The Bernanke comments helped to drive up oil prices by almost $2 a barrel to $96.47 US.
Currency experts said the foreign exchange markets haven't seemed that worried by the possibility of a Parti Québécois victory in Tuesday's Quebec election.
"We’ve been through a number of separatist governments," noted Adam Button, a currency analyst at ForexLive.com in Montreal.
"[A PQ victory] won’t translate into a referendum at any time in the foreseeable future," he told CBCNews.ca. "There just isn’t the appetite for separatism and the market isn’t overly concerned."
Another analyst thinks it's possible that currency traders may currently be underpricing the risk.
"If we have a PQ win and [the Bank of Canada] sounds less hawkish, then we could see [the Canadian dollar] drift closer to parity in the near-term," Scotiabank currency strategist Camilla Sutton said in emailed comments.
"However in the long-term and on a relative basis, the [Quebec] election pales in comparison to risks that other countries face. Hard to pit a PQ win versus a Greek exit [from the euro]," she said.