Canada's dollar dropped below parity with the U.S. currency for the first time in half a year on Tuesday, but pared losses as hope mounted that the U.S. Federal Reserve would offer some soothing words to shore up investor confidence.
Falling as low as $1.0010 to the U.S. dollar, or 99.90 U.S. cents, it was the first time the Canadian currency has been weaker than the greenback since February 1.
The Canadian dollar was not the only commodity currency under pressure following heavy falls in the overnight session. At one point, the Australian dollar fell below parity against the U.S. dollar, sliding to $0.9927, its lowest in about five months, but later recovered to $1.0157. The Aussie has lost about 10 cents from a 29-year peak of $1.1081 set just two weeks ago.
Meanwhile, the drop below parity put the Canadian dollar's losses at more than six cents less than a month ago. It was within striking distance of hitting a modern-day high but has been swept up in the global selloff of riskier assets.
The price of oil, a key Canadian export, was also lower and fell below $80 a barrel for the first time since October, keeping pressure on the Canadian dollar.
Uncertainty over economic growth in the United States is a major factor putting pressure on the Canadian dollar, the U.S. being Canada's biggest trading partner.
