The Canadian dollar shot up by nearly a cent on Thursday, as rising oil prices and surprising trade numbers heartened investors.

The loonie closed at 80.49 US, up 0.9 of a cent, after trading as high as 80.66.

The dollar and Toronto stocks have seen wide swings in the last two weeks as the price of oil surged and sank again.

Yesterday, the dollar was below 80 cents and stocks fell after oil plunged eight per cent to the $48 US range.

"We’re seeing a rebound in oil from the low prices we saw yesterday, so that’s driving the Canadian dollar higher," said Scott Smith, senior market analyst at Cambridge Mercantile Group

At the same time there’s some downward pressure on the U.S. dollar after U.S. trade numbers that were a lot worse than expected.

"That’s due to the strengthening U.S. dollar boosting the overall price of exports and lowering the value of imports so we’ve seen some of the steam come off the U.S. dollar at the same time," he said.

Crude cruises higher

On Thursday, West Texas Intermediate crude, the contract most commonly traded in North America, rose $2.20 or more than four per cent to $50.65 US a barrel. Brent, the international crude contract traded in London, was up $2.37 to $56.53.

Oil prices have been seeking a bottom since last November, when the Organization of Petroleum Exporting Countries decided not to cut its output in the face of a global glut of crude.

Figures out of the U.S. yesterday showed record stockpiles of oil as well as strong production in the U.S. oilpatch and that could mean crude’s volatility will continue.

"Obviously the inventory numbers highlight that we're not out of the woods yet," said Stephen Lingard, managing director at Franklin Templeton Solutions.

"In some ways, the pain really hasn't been felt. A more drawn-out, extended lower price oil environment will I think cause some more discipline on the high marginal cost producers - we have seen it in the rig counts, we have seen it in announced spending cuts. But it's still early days."

Today, Toronto stocks were up 129.27 points to 15,124.92 with energy stocks leading the way.

There was optimism over Canada’s merchandise trade figures, with the deficit widening to $649 million in December, much less than economists had expected.

Exports were up 1.5 per cent, though the falling price of oil cut into the dollar value for exporters.