Canadian dollar, TSX retreat

The Canadian dollar kicked off the new year above parity but fell slightly from Friday's two-year high as commodity prices pulled back from record territory.

The loonie gave back 0.39 of a cent to close at 100.15 cents US as commodities moved lower.

Recent strength in the Canadian dollar has been fuelled by higher crude prices, which peaked early Tuesday at a two-year high before losing ground.

The February crude oil contract was down $2.17 at $89.39 US a barrel. The March copper contract on the Nymex fell nine cents to $4.37 US after reaching a record Friday.

The February gold contract lost $44.10, or three per cent, to $1,378.80 US after hitting a record high Monday.

The Canadian dollar closed above parity against the U.S. currency Friday at 100.54 cents U.S., its highest close since May 2008.

The U.S. dollar lost ground against most G7 currencies on thin trading over the holiday.

Meanwhile, the S&P/TSX composite index was dragged lower, after opening higher, as falling commodity prices and the weaker currency sent investors to the sidelines.

The TSX was off 40.91 points, or 0.3 per cent, at 13,402.31.

Investors are looking toward North American employment data set to be released Friday, which will impact the direction of the Canadian and U.S.

Canadians will get a first look at how the economy is faring later this week when Statistics Canada issues its jobs report for December on Friday. Economists expect that the economy created another 20,000 jobs, on top of the 15,200 created during the previous month.

Good news will help the Canadian dollar gain further traction and bad news could see it slip.