:format(jpeg)/cloudfront-us-east-1.images.arcpublishing.com/tgam/EOACNBIH3FDGVD25YHANVQ3YNU)
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto in this January 23, 2015, file photo. The Canadian dollar pared earlier session losses against its U.S. counterpart on Tuesday, strengthening after data showed January growth was better than feared. REUTERS/Mark Blinch/FilesMARK BLINCH/Reuters
The Canadian dollar dipped below 75 cents (U.S.) in Tuesday's trading as equity markets worldwide remained extremely volatile. That's the lowest level the loonie has been against the U.S. dollar since 2004.
At one point in the trading day, the loonie hit 74.89 cents (U.S.). It closed down nearly half a cent, at 74.93 cents.
The downward pressure on the Canadian dollar comes despite oil prices moving slightly higher after hitting a record low and sinking more than 6 per cent on Monday.
Pressure on the Canadian dollar is coming from growing concern that China's economy is slowing. The Shanghai Composite index fell another 7.6 per cent on Tuesday, hitting an 8-month low. China is Canada's second biggest trading partner, second only to the U.S. Canada's economy relies on the ability to sell domestic resources outside its borders. If China is buying less because of a slowdown that has a direct impact on Canada and the dollar.
As well, currency traders are looking ahead to the U.S. Federal Reserve announcement on interest rates. With a slew of strong economic news out of the U.S., the economy there is showing enough momentum that it could handle a slight rate increase. That would strengthen the U.S. dollar and weaken the Canadian dollar right away.
West Texas Intermediate (WTI) crude closed up $1.07 (U.S.) at $39.31, after setting a fresh 7 year low on Monday.
-------
Click here for the Report on Business currency converter.
The Globe and Mail receives compensation from CanadianForex Ltd. for referred use of their international money transfer service.