NewsAlert:Loonie closes below 70 cents US

Canada’s main stock market in Toronto bounced back into positive territory on Tuesday after falling for nine consecutive sessions, though both oil prices and the Canadian dollar hit 12-year lows. Six of the TSX index’s eight main sectors finished with gains.

The S&P/TSX Gold Index lost 3.6 percent as the price of the metal retreated for a third straight day. First Quantum Minerals Ltd declined 7.1 percent to C$3.94.

And what about the psychological impact of a lower Canadian dollar on people north of the border? It was compounded by the Bank of Canada’s Business Outlook Survey.

Raw-materials and energy producers tumbled as the Standard & Poor’s/TSX Composite Index retreated 0.2 percent, erasing a rally of as much as 1.1 percent.

At one point in the day, the Canadian dollar fell below 0.70 US dollar, the first time it has reached the level since April 2003. Also, as the housing market continues to remain stable in most Canadian cities, the construction and forestry industry will also continue to prosper. Since then, most real estate markets in Canada have either stabilized and become balanced markets or, like the more oil-dependent cities like Calgary, Fort McMurray and Edmonton, experienced a housing price correction.

In previous instances where weak oil exports have hurt the loonie, other aspects of the Canadian economy have picked up the slack. Texas light crude oil was selling at just $31 a barrel on Monday afternoon – a 12-year low – while Albertan heavy crude futures were going for just $16, which is the lowest it’s ever seen.

Antweiler says we’ll have to ride this rollercoaster until Canada’s economy can diversify. “We recognize that those are important indicators for Canadians as they go about considering their situation”.

The top forecaster of the Canadian dollar said the currency will fall to a record 59 cents compared to the US dollar by the end of the year as further weakness in the energy sector saps growth in an economy already stretched by a heavily indebted consumer and the Bank of Canada cuts interest rates for a third time.