TORONTO — The Canadian dollar dropped to levels not seen in more than a decade as the price of oil and gold both came under pressure.
The loonie was down 0.47 of a cent at 76.76 cents US. That's the lowest level since September 2004.
The dollar has been on a downward slide since last summer, when the price of oil started to weaken.
Oil prices dropped below the US$50 mark in trading Wednesday, while gold traded for less than US$1,100 an ounce.
Compounding the loonie weakness was a decision by the Bank of Canada to cut its key interest rate last week.
The central bank's overnight rate target stands at 0.5 per cent.
FIVE THINGS TO KNOW ABOUT THE CANADIAN ECONOMY
The Canadian economy is in the spotlight today with the sinking Canadian dollar and the Parliamentary Budget Office's determination that the federal government is facing a $1-billion deficit. Five things to know:
The loonie: In late-morning trading, the Canadian dollar slumped to 76.76 cents US, the lowest level since September 2004. The loonie is suffering from lower oil and gold prices and the Bank of Canada's interest rate cut last week.
Deficit: Number-crunching by the Parliamentary Budget Office projects the federal government is facing a $1-billion shortfall in 2015-16. In its April budget, the federal government predicted a string of surpluses, starting with $1.4 billion for this election year.
Oil: On commodity markets, the September contract for crude oil dropped below the $50 mark at one point — a kick in the teeth to the loonie, now considered a petro-currency.
Recession?: The Canadian economy contracted in the first quarter of the year at an annualized rate of 0.6 per cent, fuelled in part by a slump in non-resource exports. That plunge is a phenomenon Bank of Canada governor Stephen Poloz described as "a puzzle that warrants further study."
Optimistic Oliver: Finance Minister Joe Oliver isn't concerned, however, predicting on Tuesday that the economy will rebound later this year and insisting the government will live up to its long-held promise to balance the budget this election year.
"We are very comfortable, very comfortable we're going to achieve a budgetary surplus this year and new numbers will be coming out fairly soon," he said.
