Loonie Sinks as Oil Price Plunge Weighs on Canadian Economy

The Canadian dollar, also known as the loonie, hit its weakest level since July 14 after oil prices plummeted by 7.2%. The price of crude oil fell to $82.85 a barrel, which had a significant impact on the currency.

RBC Capital Markets attributed the decline in the loonie to the drop in oil prices, as it is one of Canada's biggest exports. When oil prices fall, investors expect less export income and fewer foreign dollars being converted back into Canadian dollars.

The technical setup also supported the move, with the USD-CAD rebounding from a recent support level near 1.4025. This can draw in momentum-driven US dollar buyers, making the loonie even weaker.