--Expectations are for 10,000 net gain in Canadian jobs --Canadian dollar weakened by 2.1% versus U.S. dollar in last two weeks --Positive labor print will help strengthen Canadian dollar: analysts By David George-Cosh Of DOW JONES NEWSWIRES TORONTO (Dow Jones)--Leave it to labor to be the likely linchpin for the loonie. Friday's employment data in Canada will likely be a key influence on the Canadian dollar after a two-week that has seen the currency weaken by 2.13% against the greenback, pushing it below parity for the first time since April 17, analysts say. Commodity-based currencies, such as the Canadian and Australian dollars, were hit hard after a wave of political and economic uncertainty in the euro zone shook global markets, leading investors scrambling for safe harbors like the U.S. dollar and bond markets. Those jitters came after a period of relative strength for the Canadian dollar, recently bolstered by the Bank of Canada's somewhat hawkish tilt in monetary policy. That helped the Canadian dollar to outperform its peers, with the U.S. dollar sinking to C$0.9799 on April 27, a level not seen since last September. At the same time, the greenback advanced on the euro and Japanese yen following some strong U.S. data. But last week's missed read of U.S. nonfarm payrolls, coupled with political developments in France and Greece, broke down the broader theme of a solid recovery in North America that saw the Canadian and U.S. dollar move together in lock step. "We're not looking at the relative growth performance of the Americas versus the rest of the world," said Jeremy Stretch, head of FX strategy for CIBC World Markets in London. "It's more a case of looking at risk aversion and looking at impact of potential risks to the commodity basket in a weakening global environment." The decline in crude prices has also had an effect on the Canadian dollar, said Andrew Busch, managing director of global currency and public policy strategist for BMO Capital Markets in Chicago. Due to heightened concerns about the state of the U.S. economy and higher OPEC crude oil production, the price of light crude has declined in May from a high of $106.43 to $96.76 on Thursday. "The price of oil deteriorating as quickly as it has takes away one of the biggest positives for Canada," Busch said. The question is whether the Canadian dollar can retrace its recent losses and reassume its position as an outperforming currency, or continue to weaken, weighted down by a foggy domestic picture and European concerns. The answer might lie in the April employment figures Friday morning. Economists expect 10,000 new jobs after a whopping gain of 83,200 in March. "If we see a reasonably supportive employment backdrop on Friday, then the rally in USD/CAD could run into a little bit of resistance," said Stretch, noting that the Canadian dollar could also move higher against the euro and the Australian dollar. Not all analysts agree that the Canadian dollar will positively react to a strong labor data. The U.S. dollar's poke through the C$1.0050 level on Wednesday was confirmation that the broad risk sentiment is the key focus for the loonie right now, said Greg Moore, currency strategist at TD Securities in Toronto. "We may see a return to the regional macro divergence theme, but it will take some considerable taming of the recent eurozone worries." -By David George-Cosh, Dow Jones Newswires; 416-306-2017, david.george-cosh@dowjones.com

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