The loonie was up 1.04 cents to 98.22 cents U.S. after eurozone leaders agreed to use the continent's bailout fund to funnel money directly to struggling banks.
"It’s Friday, month-end, quarter-end, a long weekend. The EU has fired a shot across the bow in an attempt to fix everything in one broad brush stroke," said a report from BMO Capital Markets.
"Time will tell how long this risk rally lasts, but for today the markets are clearly celebrating."
Oil surged after eurozone leaders agreed to pump bailout money directly into banks instead of onto the balance sheets of already stressed governments. The decision eased fears of widespread European bank failures that could have hampered lending in other parts of the world.
The measures were a breakthrough for Europe, whose leaders have repeatedly clashed over how to deal with hefty government debts. The deal was struck as borrowing rates in Spain and Italy surged to levels that were considered unsustainable.
The price of oil posted the biggest one-day increase in more than three years, with the August crude contract surged $7.27 to US$84.96 a barrel on the New York Mercantile Exchange on the theory that a cure to Europe's debt woes will remove one of the major drags on global growth.
Crude had fallen to near eight-month lows and down from US$106 a barrel less than two months ago amid signs that economic growth and oil demand have been slowing in the U.S., Europe and China.
The August gold contract gained $53.80 to US$1,604.20 an ounce, while the September copper contract moved up 17 cents to US$3.50 a pound.
Statistics Canada reported Friday that Canada's economy grew a surprisingly perky 0.3 per cent in April, the first time so far this year it has expanded above an annualized rate of two per cent.
Economists had expected a modest 0.2 uptick in April, following a weak start to the year that resulted in 1.9 per cent annualized growth in the first quarter — well short of the 2.5 per cent growth rate predicted by the Bank of Canada.
"With April’s results now in hand, the Canadian economy will still have to work hard to top the two per cent growth mark, but the chances are quite a bit better than before this report," said Robert Kavcic an economist at BMO Capital Markets.
"Still, given that the Bank of Canada's first half forecast (2.5 per cent in Q1 and Q2) overshot the mark, and with the Fed easing through yearend, we expect the Bank to remain on hold until July 2013."
Data out of the U.S. showed Americans were more cautious about spending in May as their income increased only slightly, indicating the faltering job market has stoked fears about the economy's health.
The U.S. Commerce Department said consumer spending showed no gain in May, the weakest figure since spending was unchanged in November. Income growth edged up 0.2 per cent, matching the modest April increase.