The Canadian dollar hit a six-year low Friday after a report showing Canada's GDP fell 0.2 per cent in November.
The loonie was trading at 78.67 US cents at the close of trading, down 0.53 of a cent from Thursday's close.
The currency had gone as low as 78.22 cents US, its lowest level since mid-March 2009, in morning trading.
Toronto stocks initially slumped, but the TSX closed up 36 points at 14,673 after oil strengthened.
Investors were concerned about the worsening economic picture emerging from Canada because of low oil prices.
Manufacturing and mining, quarrying, and oil and gas extraction all showed weakness in the October to November period, according to Statistics Canada.
The loonie is down nine per cent since the beginning of the year and three per cent this week alone.
But BMO chief economist Doug Porter says a falling dollar isn't all bad news.
"A falling currency does not necessarily equal economic doom," he said in a note to investors.
"True, the limping loonie is making southbound travel suddenly much more expensive, and will also put some serious upward pressure on core inflation. But, the currency also acts as a buffer against big changes in the price of Canada's exports, and it is responding about in line with the steep fall in oil, copper and iron ore."
Many analysts are predicting future woe for the Canadian economy, with JP Morgan warning the Canadian dollar will fall to 77 cents if the Bank of Canada cuts rates again, as some economists have predicted.
"There will be blood," the Wall Street firm predicted, referring to the ripple effect of low oil prices on the economy.
It forecast a potential recession in Alberta with a recovering manufacturing sector in central Canada failing to offset the downturn there.
Oil was having a better day Friday, with the Brent crude contract in Europe closing above $52 US a barrel and West Texas Intermediate crude trading in New York at $47.52, up by $2.96.
Oil traders were spooked by violence in Iraq, where Islamic State militants had struck at Kurdish forces in the oil-producing region near Kirkuk.
Economic data out of the U.S. was disappointing, with fourth-quarter growth coming in at 2.6 per cent, lower than expected.
The Dow Jones industrial average is down 251 points or 1.4 per cent to 17,165.72. The Standard & Poor's 500 dropped 25 points to 1995 and the Nasdaq was off 48 points to 4,635.
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