The loonie lost 0.65 of a cent to 98.13 cents US.
Positive economic news from Canada's biggest trading partner helped to raise the loonie from the lows of the session.
A day before the release of the U.S. non-farm payrolls report, payroll firm ADP said the American private sector created 325,000 jobs in December.
Economists have been expecting Friday's report to show that the U.S. economy created a total of about 140,000 jobs last month.
"Therefore, today’s number will certainly increase expectations for a much heartier gain in tomorrow’s report," said CIBC World Markets economist Andrew Grantham.
"Although tomorrow’s figures will be most crucial, the ADP survey adds to growing evidence that the U.S. labour market may have turned a corner."
Canadian employment data for December will also be released Friday.
European worries were front and centre amid worries that banks will struggle to raise much needed new capital.
Trading in UniCredit SpA, Italy’s largest bank, was suspended for the second day running Thursday after shares tumbled further in the wake of a heavily discounted share offering. UniCredit is trying to raise €7.5 billion to meet new European requirements for banks to shore up capital reserves.
In Spain, the new conservative government said it expects the country’s banks to come up with additional provisions of up to €50 billion, which amounts to four per cent of Spain’s gross domestic product, in extra provisions on bad property assets.
Meanwhile, France’s borrowing rates rose slightly in a bond auction on Thursday as investor demand eased.
The majority of bonds sold Thursday were for 10 years, which markets eye as a benchmark of investor confidence. Demand for them surpassed the supply but was considerably less than at an auction in December. The yield was 3.29 per cent, up from 3.18 per cent last time. In total, €4.02 billion were sold.
The euro fell as low as US$1.2775 early Thursday, its lowest point since September 2010. It was trading slightly higher at $1.2782 late Thursday. The euro was worth $1.2938 late Wednesday.
The February crude contract on the New York Mercantile Exchange declined $1.41 to US$101.81 a barrel. Prices were also under pressure from data showing that U.S. oil inventories increased by 2.21 million barrels last week.
The March copper contract on the Nymex dipped one cent to US$3.43 a pound. Bullion advanced with the February contract in New York up $7.40 to US$1,620.10 an ounce.