Loonie closes in on $1.06 US

The Canadian dollar surged to a 50-year high against the U.S. greenback Wednesday after the U.S. Federal Reserve cut interest rates again, oil prices surged and the Canadian economy showed steady growth.

At the close of trading, the loonie was up 0.93 of a cent to $1.0585 US and traded as high as $1.0593 US.

The Canadian dollar has not been that high since Aug. 21, 1957, according to Bank of Canada data.

That's the same day the loonie reached its post-war high of $1.0614 US.

The loonie reached parity with the U.S. dollar on Sept. 20 and has just kept climbing in the six weeks since.

It's risen by 23 per cent against the U.S. dollar since the start of the year.

The loonie's rise was, in part, simply due to another drop in the worldwide value of the U.S. dollar.

Wednesday afternoon's Federal Reserve rate cut helped to drive down the U.S. dollar against most major currencies.

Also giving some support to the loonie Wednesday were rising oil prices, a relatively good August economic report for Canada, and the promise of $60 billion in tax cuts over the next five years outlined in Tuesday's economic statement.

Oil hits new record high

Canada's dollar is regarded as a commodity-driven currency that is closely tied to the fluctuations in the price of oil. Following the release of the latest U.S. oil inventory figures Wednesday that showed an unexpected fall in supplies, light sweet crude for December delivery surged more than $4 US to hit a record $94.45 US a barrel.

Earlier Wednesday, Statistics Canada reported that the Canadian economy grew by 0.2 per cent in August, surpassing the 0.1 per growth that had been projected by economists.

Market watchers also said the corporate and personal tax cuts contained in Tuesday's economic statement were stimulative and therefore loonie-positive.