A March break holiday in the U.S. sunbelt is getting more expensive for Canadians as the loonie continues its downward slide.

Today, the Canadian dollar closed at its lowest level in nearly five years after the economy was hit with more bad news, this time in the housing sector.

The loonie fell to close at 76.98 cents U.S., down 0.45 of a cent today, its lowest level since September 2004. The dollar traded down as much as 1.20 cents earlier in the day to as low as 76.53 cents US.

A report today showed Canadian housing starts fell for the sixth straight month in February, down 12.3 per cent to a seasonally adjusted annual rate of 134,600 units. February's figures are a 30 per cent drop from the same period last year.

The drop in the Canadian dollar came despite a rise in oil prices. The April crude contract on the New York Mercantile Exchange rose $1.55 to US$47.07 – its highest close in two months.

Typically the loonie rises with oil prices because of Canada's strong oil and gas sector.

"Given the fact that the TSX is doing so badly, reflecting pessimism in the economy, and the cutting of interest rates ... . These aren't good for the Canadian dollar," said CIBC economist Benjamin Tal.

BMO Capital Markets economist Douglas Porter said the Canadian dollar's fortunes are tied to global stock markets, which are falling along with the Toronto Stock Exchange.

That's despite recent kudos Canada has received for having one of the more stable global economies. The World Economic Forum said last fall that Canada had the soundest banking system in the world.

"Unfortunately all of Canada's wonderful fundamentals aren't standing in the way of an even weaker Canadian dollar and they aren't standing in the way of what is a tidal wave of very negative news from outside our borders," Porter said.

He said the loonie's dive today was also due to the U.S. greenback gaining ground against most major global currencies.

"During these times of extreme stress on financial markets globally, investors are going to the old safe harbour of the U.S. dollar," Porter said.

"Despite all the warts on the U.S. economy and the U.S. financial markets, it is still the most liquid market there and is still seen as a relatively safe haven."

Travel agencies say while most March break vacations are booked, the dollar's slide will impact spending money for those travelling down south, or west.

Tom Sherlock, manager of Travel By Design in Vancouver, said Hawaii is one destination where the all-inclusive packages aren't a common concept, so travellers headed there will be forking over more Canadian dollars if the loonie keeps dropping.

Sherlock also said the "psychological" impact of the loonie's descent began when it fell below 80 cents U.S. He said the next noticeable change will happen if the loonie dives below 75 cents US.

However, Sherlock said what is affecting people most when booking a vacation is not the dollar, but the overall economy.

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"The lack of confidence that people are going through is the major factor on the dwindling travel revenue that is out there," he said.