The S&P/TSX composite index slipped 88.24 points to close at 14,642.84, while the loonie closed at 77.00 cents US, down 0.10 of a U.S. cent from Thursday's close.
Earlier in the morning, the loonie had been below 77 cents US for the first time since March 9, 2009.
American market indexes were mixed, with the Dow Jones industrial average losing 33.80 points to 18,086.45, while the S&P 500 composite index gained 2.35 points to 2,126.64 and the Nasdaq index was up 46.96 points to a record high of 5,210.14.
The Nasdaq was boosted by a more than 16 per cent gain in value of Google shares. The tech giant reported strong results that beat analyst expectations after markets closed on Thursday.
On the commodity markets, the August gold contract fell $12.00 to $1,131.90 an ounce — its lowest level since 2010.
Meanwhile, the August crude contract was down two cents at US$50.89 a barrel and the August contract for natural gas was down 1.6 cents at US$2.87.
"All commodities are pretty weak," said Stephen Lingard, senior vice-president at Franklin Templeton Solutions.
Lingard said strength in the U.S. economy relative to Canada's economy, which may have entered a technical recession, has caused the U.S. dollar to firm.
"That historically has led to a headwind for commodities, which are priced in U.S. dollars, so I think that's why we've seen some weakness," Lingard said.
In economic news, Canada's annual inflation rate edged up to one per cent in June, from 0.9 in May, led by gains in the prices of food and shelter.
"Given the decline in the Canadian dollar, that's actually providing a bit of a boost to our overall inflation numbers, which puts the Bank of Canada in a bit of a hard position," Lingard said.
The central bank slashed its benchmark interest rate by 25 basis points to 0.5 per cent on Wednesday, hoping to offset some of the effects of the plunge in oil prices and weaker-than-expected exports.
"To be cutting (the overnight lending rate) as inflation is maybe surprising a little to the upside is a tricky position for the Bank of Canada," Lingard said. "But I think it's the right thing to do given that a lot of this is import inflation, meaning our cheap Canadian dollar still has to import foreign goods that have gone up in price given the depreciation in our currency."
South of the border, inflation data was in line with analyst expectations, while housing starts and building permits data were stronger than expected, making a fall interest rate hike from the U.S. Federal Reserve seem increasingly likely, said Lingard.
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