TORONTO — The Canadian dollar shot up almost a full US cent to a 13-month high Thursday as the U.S. currency weakened after the U.S. Federal Reserve launched another round of economic stimulus.

The loonie jumped 0.87 of a cent to 103.27 cents US after the U.S. Federal Reserve said it will spend $40 billion a month on a new round of bond purchases to boost the weak economy, and has not set an end date.

The money will be spent on mortgage backed securities to keep interest rates low, encourage lending and support the slow recovery of the housing sector.

The loonie has surged in value against the U.S. dollar since last week, up 2.35 cents since last Wednesday's close, after European Central Bank president Mario Draghi announced the ECB would buy government bonds to hold borrowing costs down the most vulnerable eurozone members. And the greenback further weakened over the last week as speculation grew the Fed was prepared to launch a third round of stimulus, particularly after August job creation figures disappointed even modest expectations.

The U.S. central bank will also continue to buy bonds with long maturity horizons under its so-called Twist program, leaving them buying a total of US$85 billion per month for the balance of the year under the two programs.

The Fed also says it will keep buying more bonds until the job market shows substantial improvement.

That could take awhile as the Fed also has lowered its outlook for growth this year, saying growth will be no stronger than two per cent this year, down from a 2.4 per cent forecast in June.

However, it also expects growth to accelerate next year as much as three per cent, up from June's forecast of as much as 2.8 per cent. For 2014, the Fed projected growth between three and 3.8 per cent.

The stimulus program involves quantitative easing, which sees the central bank print more money to fund the bond purchases, which in turn weakens the currency.

The Fed turned to quantitative easing as a way to stimulate the economy after it lowered short-term overnight interest rates to about as low as they can go. The Fed said Thursday it has extended a plan to keep short-term rates at record lows through mid-2015.

In two previous bond-buying programs, the Fed bought more than US$2 trillion of Treasurys and mortgage-backed securities after the 2008 financial crisis.

The currency also found lift from higher commodity prices.

Oil prices advanced after attacks on U.S. diplomatic missions and the killing of the U.S. ambassador to Libya sparked new worries about unrest in the Middle East. The October crude contract gained $1.30 to US$98.31 a barrel.

December copper was up two cents at US$3.71 a pound while December bullion gained $38.40 to US$1,772.10 an ounce.

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• Bank of Montreal Dollar - 1825

  Until the mid-19th century, Canada's future provinces used the "Canadian pound." Bit by bit, various jurisdictions began to switch to a metric system, and with it came the concept of the Canadian dollar. This Bank of Montreal-issued dollar bill is among the first bills called a dollar to have been printed.

• Bank of Montreal Dollar - 1859

  Various banks printed their own currency until eventually the Bank of Montreal was charged with being the official issuer of the Canadian dollar, a practice that stayed in place until the Bank of Canada was created in the 1930s.

• Bank of Toronto Dollar - 1859

  The Bank of Toronto (today known as TD Bank) was among many banks that issued Canadian dollars in the second half of the 19th century.

• Ontario Bank Dollar - 1861

  Image courtesy of the Bank of Canada.

• Province of Canada Dollar - 1866

  The province of Canada comprised Ontario and Quebec and existed from 1841 to 1867. It issued its own currency. Image courtesy of Bank of Canada.

• Dominion of Canada Dollar - 1870

  With confederation in 1867, the first truly national Canadian dollar came into being. Image courtesy of the Bank of Canada.

• Dominion of Canada Dollar - 1898

  Image courtesy of the Bank of Canada.

• Dominion of Canada Dollar - 1911

  Image courtesy of the Bank of Canada.

• Dominion of Canada Dollar - 1917

  Image courtesy of the Bank of Canada.

• Dominion of Canada Dollar - 1923

  Image courtesy of the Bank of Canada.

• Bank of Canada Dollar - 1935

  The Bank of Canada took over the issuance of currency from the Bank of Montreal when it was created in the 1930s. Image courtesy of the Bank of Canada.

• Bank of Canada Dollar - 1937

  Image courtesy of the Bank of Canada.

• Canada Dollar - 1954

  The 1954 dollar was the first to feature Queen Elizabeth II and the first to simply say "Canada" on it, rather than featuring the name of a bank, province or referring to the country as a "dominion."

• Centennial Dollar - 1967

  Image courtesy of the Bank of Canada.

• Canada Dollar - 1973

  This was the last paper dollar issued in Canada. It was in circulation until 1987, when the loonie replaced it. Image courtesy of the Bank of Canada.

• The Loonie - 1987

  The loonie replaced the one-dollar bill in Canada in 1987. Image: CP

• Canada 125 Loonie - 1992

  The Mint issued a special edition of the loonie in 1992 to commemorate the country's 125th birthday.

• Vancouver Olympics Loonie - 2010

  An Inuit inukshuk graced the tail of this loonie issued in 2010 to coincide with the 2010 Winter Games in Vancouver.

• The Loonie - Anniversary Special - 2012

  The Royal Canadian Mint issued a special-edition version of the loonie in 2012 to commemorate the coin's 25th anniversary. Image: Royal Canadian Mint.