Loonie ends weaker on soft jobs data, euro fears

The Canadian dollar ended weaker against the U.S. currency on Friday, following the euro lower, as worries about Europe's debt crisis and disappointing domestic employment data ended a four-day winning streak.

Despite the decline, the Canadian dollar notched its biggest weekly gain since July, buoyed by earlier progress on the European debt crisis and positive U.S. economic data.

The euro fell against the dollar for the first time in five sessions, with investors wary of placing aggressive bets in favor of the currency ahead of a European Central Bank meeting and a European Union summit next week.

Generally what CAD did today is what euro did, a little weaker than yesterday, following a similar pattern, said Camilla Sutton, chief currency strategist at Scotia Capital.

The U.S. dollar started to gain ground. Oil is closing up higher, equities are a bit mixed. It's just anticipation over what is going to transpire this weekend and next week for Europe.

The Canadian dollar ended the North American session at C$1.0183, or 98.20 U.S. cents, down from Thursday's finish at C$1.0143 against the U.S. dollar, or 98.59 U.S. cents,

Markets have posted strong gains after central bank moves earlier this week cut funding costs for banks. Signs that euro zone policymakers are working hard to resolve a compromise deal ahead of a December 9 summit, viewed as make-or-break for the 12-year old single currency bloc, also lent support.

Economic data was mixed, with Canadian employment disappointing and U.S. jobs growth in line with expectations.

The economy lost 18,600 jobs in the month following a hefty 54,000 drop in October, Statistics Canada said on Friday. As a result, the unemployment rate climbed to 7.4 percent from 7.3 percent.

Analysts surveyed by Reuters had forecast, on average, a gain of 19,100 jobs with the unemployment rate holding steady.

The U.S. government said the economy created 120,000 jobs last month, while the jobless rate dropped to a 2-1/2 year low of 8.6 percent, further evidence the economic recovery was gaining momentum.

John Curran, senior vice president at Canadianforex, a commercial foreign exchange dealer, said the currency was still benefiting from news earlier this week that global central banks - including the Bank of Canada - would coordinated a move to keep funds flowing through financial markets that are being rocked by Europe's escalating debt crisis.

People are thinking there is going to be a positive outcome on a hangover effect from what the central banks did earlier in the week, said Curran.

Investors will also keep a close eye on the Bank of Canada, which is all but certain to keep its main interest rate at 1 percent at its scheduled policy announcement on Tuesday.

Traders will scrutinize the language of its statement for clues on whether borrowing costs are more likely to rise in late 2012 or early 2013, as well as hints on how bad the global economy would have to get before the central bank would reverse course and ease policy.

Canadian government bond prices ended the session slightly higher. The two-year bond rose 6 Canadian cents to yield 0.903 percent, while the 10-year bond rose 13 Canadian cents to yield 2.121 percent.