The loonie weakened against a strengthening U.S. dollar amid a series of trade deficit reports released Thursday, as Canada's main stock index moved up moderately.
The Canadian dollar was trading at an average price of US79.69¢, down 0.44 of a cent.
Statistics Canada says that the country's trade deficit increased to $3.4 billion in August compared with a $3-billion deficit in July. Meanwhile, rising U.S. exports helped trim that country's trade deficit to its lowest level in nearly a year.
"Obviously, the trade imbalance was a bit larger than we anticipated and it just goes to show you what a strong (Canadian) dollar does," said Allan Small, a senior investment adviser at Holliswealth.
"It's the third month in a row that our exports were down, so a strong dollar's definitely not what I think anybody would like to see with respect to manufacturing, with respect to exports. And now we're paying the price for it.
"The Bank of Canada is going to think long and hard about when they're going to raise rates again and if they will raise rates again."
Two rate hikes over the summer by the central bank following the economy's surprisingly powerful start to the year had seen the loonie approaching 83¢ US in September.
South of the border, it was the fourth straight record day for equity markets on Wall Street.
The Dow Jones industrial average climbed 113.75 points to 22,775.39, the S&P 500 index was up 14.33 points to 2,552.07 and the Nasdaq composite index added 50.73 points to 6,585.36.
The Toronto Stock Exchange's S&P/TSX composite index gained 55.30 points to 15,776.30 in a broad-based advance.
"It's one of those days where the three main sectors are up: financials, materials and oil," said Small. "So it's a good day."
The November crude contract was up US81¢ to US$50.79 per barrel.
Looking ahead to Friday, investors will be eyeing Statistics Canada's labour force survey for September, as it's usually a driver for markets. The U.S. government will also release its monthly update on jobs growth that day.
On the corporate front, shares of TransCanada Corp. were up 66¢, or 1.08%, to $61.55 on Thursday, amid news that it has cancelled its $15.7-billion proposed Energy East pipeline, cutting off a potential conduit to bring more western Canadian oil to eastern refineries and overseas export markets.
Elsewhere in commodities, the November natural gas contract was down US3¢ at US$2.92 per mmBTU, the December gold contract added US$3.60 to US$1,273.20 an ounce, and the December copper contract was up US9¢ to US$3.05 a pound.