The loonie was down 0.37 of a cent to 98.89 cents US.
The dollar has been flirting with parity against the U.S. dollar this week amid heightened investor appetite and signs that the U.S. economy is recovering as it should.
Kevin Headland of Manulife Asset Management says the loonie's recent strength has been the result of dropping currencies, especially in Asia.
"One of the things propping the Canadian dollar up right now is the weaker currency in Asia and the risk with Japanese yen softening" said Headland, director of Manulife's portfolio advisory group.
"The currency market is looking for someone on the other side of the trade, and it seems that Canada has been the benefit of that currently."
The U.S. dollar has soared above 100 yen for the first time in more than four years, driven by aggressive credit-easing aimed at reviving Japan's sluggish economy and improved U.S. economic figures.
The greenback rose as high as 101.30 yen, the first time since April 2009 that the greenback has traded above 100 yen. The move lifted Japanese stocks to their highest level in more than five years.
The weaker yen is a boon to Japan's major auto and electronics exporters. The government said the yen's fall signalled that Prime Minister Shinzo Abe's policy mix of increased public spending and aggressive monetary easing, dubbed "Abenomics," was proving successful. Kick-starting the economy has been Abe's top priority since he took office late last year.
Headland said a short-term pullback in the loonie may result if Canada's economy falls behind the pace of the U.S. economy.
"If that is the case, then you might see a divergence in the softening of the loonie," he said.
Earlier this week, TD Bank (TSX:TD) forecasted that the loonie could drop to as low as 90 cents US by the end of the year.
The bank cited weaker economic growth in Canada, declining commodity prices and the strengthening outlook for the U.S. greenback as all factors working against the loonie.
Meanwhile, Statistics Canada reported there were job gains of 12,500 in April, slightly missing expectations. The unemployment rate was unchanged at 7.2 per cent, in line with what was predicted.
Analysts had expected Ottawa to announce an increase of 15,000 jobs after it reported a dismal loss of 54,500 jobs in March.
Commodities continued to weaken. The June crude oil contract declined 35 cents to US$96.04 a barrel, June gold bullion fell $32 to US$1,436.60 an ounce and July copper was up a penny at US$3.35 a pound.