The loonie was trading 0.9% lower at 1.3215 to the greenback, or 75.67 U.S. cents, its biggest decline since June 11. The currency hit its weakest intraday level since Aug. 25 at 1.3220, having pulled back from its strongest in nearly eight months last week at 1.2990.
"That heavy risk-off tone is finally making its way through to the loonie," said Scott Smith, managing partner at Viewpoint Investment Partners, adding that "we are seeing the loonie selloff in line with the rest of global financial markets."
U.S. crude oil futures settled 7.6% lower $36.76 a barrel, after Saudi Arabia cut its October selling prices and there was a flare-up of novel coronavirus cases around the world.
The Nasdaq tumbled as a sell-off in high-flying technology stocks extended to a third straight day, while the safe-haven U.S. dollar climbed to a three-week high against a basket of major currencies.
The Bank of Canada is expected to leave its benchmark interest rate on hold at 0.25% on Wednesday and at least until the end of 2022, a Reuters poll showed, despite data suggesting to some analysts that the economy is recovering faster than the central bank expected.
"It will mostly be cruise control for the time being from the Bank of Canada," Smith said.
Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries on Tuesday. The 10-year fell 3.3 basis points to 0.564%.
By Fergal Smith
