However, it was a different story in the U.S. where job creation missed modest expectations. American job gains for June and July were also revised lower.
The loonie was up 0.48 of a cent to 102.23 cents US as the U.S. currency lost ground in the wake of a disappointing August employment report.
But it was a different story in Canada as the economy created 34,300 jobs in August. That was much better than the approximately 10,000 new jobs that economists had expected.
Statistics Canada also said that the unemployment rate remained unchanged at 7.3 per cent
The commodity-sensitive loonie was also supported by higher commodity prices. The plan announced Thursday by the European Central Bank to buy up government bonds and reduce borrowing costs for the weakest eurozone countries raised hopes that greater financial stability in Europe will help the region get out of its economic slump. In turn, demand for oil and metals will hopefully rise and send shares prices higher on the resource-intensive TSX.
September copper ran ahead 13 cents to US$3.65 a pound.
Bullion prices turned positive on the prospect the U.S. Federal Reserve will decide on another round of quantitative easing, which would see the central bank print more money to buy bonds. The December contract was up $34.90 to US$1,740.50 an ounce.
The October crude contract on the New York Mercantile Exchange closed up 89 cents at US$96.42 a barrel.
In the U.S., the Labour Department reported that only 96,000 jobs were created in August, less than the 125,000 that had been forecast. The jobless rate edged down to 8.1 per cent from 8.3 per cent but that was because of fewer people looking for work.
And to top it all off, it added that 41,000 fewer jobs had been created in June and July than previously reported.
The poor showing raised hopes that the U.S. Federal Reserve will embark on another round of economic stimulus to help support the economic recovery.
Previous easing measures by the Fed have supported financial markets.
The Fed’s intentions could become clearer next week when the central bank holds its next interest rate meeting.
Still, there was a mood of general relief on markets a day following the ECB announcement.
The plan amounts to a commitment to buy unlimited amounts of short-term bonds from euro countries that request help. Ostensibly, the plan is meant to ease the financial pressures on Spain and Italy by giving them time to reduce their debt and reform their economies.
The ECB had been under pressure to take action after Spain and Italy became the latest countries forced to pay yields in the seven per cent range on their benchmark 10-year bonds earlier this year, a level that raised worries those countries could be forced to seek a bailout.
The ECB plan seemed to be working Friday as Spain saw its cost of borrowing fall. The yield on Spain’s 10-year bond fell another 0.21 of a percentage point Friday to 5.80 per cent, the first time it's gone below six per cent since May.
Investors think Spain will make a formal request to tap the new program within weeks, which could ease the pressures in the eurozone’s fourth-largest economy.