Investors are turning on the Canadian dollar, as the country's economy falls back to earth.

The currency, known as the loonie, hit a nearly 31/2 -year low against the U.S. dollar to 1.0674 Canadian dollars on Tuesday in intraday trading and is down 5% against the U.S. dollar since Sept. 19. Investors betting against the currency say a combination of falling oil prices, worries about the housing sector and high levels of household debt will ding economic growth and keep the Bank of Canada from raising interest rates. Lower interest...