11/04/2011 08:22 EDT | Updated 01/04/2012 05:12 EST

Canadian Dollar Tumbles More Than A Cent On Dismal Jobs Data

TORONTO - The Canadian dollar fell sharply Friday in the wake of a jobs report that widely missed expectations amid slowing global economic conditions.

The loonie closed off the worst levels of the session, dropping 0.84 of a cent to 98.36 cents US after going as low as 97.76 cents US as traders also took in weak U.S. employment data for October.

Statistics Canada reported that the economy shed 54,000 jobs overall during October. Most of the losses occurred in the manufacturing and construction trades. Economists had expected a moderate increase in employment of 15,000 after September's surprising 61,000 pick-up, although that was somewhat inflated by returning education workers.

The jobless rate came in at 7.3 per cent, 0.2 percentage points higher than September.

"It is too early to draw a direct link to the volatility in global financial markets as the European sovereign debt crisis rages on," said RBC assistant chief economist Dawn Desjardins.

"To be sure, additional declines in November and December would suggest that Canadian companies are feeling the pinch from falling export demand and are reacting to the uncertainty generated from outside Canada's borders."

Meanwhile, the U.S. Labour Department reported that the economy created about 80,000 jobs last month, which was close to expectations of 95,000. The jobless rate was nine per cent, down from 9.1 per cent in September.

Job growth for the last two months was also revised higher. The report showed that an additional 104,000 jobs were created during August and September.

Wary investors also kept an eye on the political drama that threatens to hobble efforts by European leaders to contain the debt crisis.

Markets were volatile earlier this week after Greek prime minister George Papandreou stunned markets by calling a referendum on the country's bailout. His plan increased investor fears of a disorderly Greek debt default and the country’s possible exit from the eurozone.

Papandreou backed off on the referendum plans Thursday. However uncertainties over Greece remain as his government faces a confidence vote in Parliament later in the day.

Meanwhile, leaders of the world’s 20 most powerful economies wrapped up a two-day meeting without agreeing on how to increase the firepower of the International Monetary Fund so that it can help stem the European debt crisis. They did acknowledge its resources should be boosted.

Commodity prices weakened following the U.S. jobs report with the December crude contract on the New York Mercantile Exchange down 19 cents to US$94.26 a barrel.

The December copper contract on the Nymex was down two cents at US$3.56 a pound.

Bullion prices dipped with the December contract down $9 to US$1,756.10 an ounce.