Wall Street stocks fell on the Bernanke speech and the euro slipped on fears the euro zone debt crisis is worsening with Greece failing to meet fiscal targets. [
Central bank news in the United States and Europe overshadowed Canadian data that showed a narrowing trade deficit and strong housing market, positive signs for the economy after a second-quarter economic slump.
"It really is about the general dollar tone and risk assets, and we see equity markets off again today and typically there is a very strong and sustained positive correlation between the Canadian dollar and risk assets," said Shaun Osborne, chief currency strategist at TD Securities.
The Canadian dollar ended the North American session at C$0.9880 to the US dollar, or $1.0121, down from Wednesday's North American close of C$0.9855 to the US dollar, or $1.0147.
Osborne said the currency could have a volatile ride in the weeks ahead as it tracks the US equity market through what is a traditionally bad month.
"September generally is not a positive month for risk assets. Historically it is the worst performing month for S&P 500 returns, so chances are we're going to see a bumpy ride for stocks for the next little while and that means the Canadian dollar will likely slip back," he said.
US stocks ended the day lower with Dow Jones industrial average and Standard & Poor's 500 Index both down more than 1 percent. The Toronto Stock Exchange's S&P/TSX composite index closed down 0.29 percent as strength in gold-mining stocks helped cushion the fall.
Crude oil futures followed Wall Street lower in reaction to the Bernanke speech.
Markets were also awaiting a speech by US President Barack Obama, who was set to address Congress at 7 p.m. (2300 GMT) to lay out a jobs package worth more than $300 billion. [
On Friday, traders will focus on Canadian employment data for August, which is expected to show the economy added 25,000 jobs.
Canadian bond prices rose across the yield curve as investors shifted to safety.
The two-year bond was up 3.5 Canadian cents to yield 0.890 percent, while the 10-year bond rose 46 Canadian cents to yield 2.219 percent.
Copyright Reuters, 2011