The Canadian dollar briefly dropped to its lowest level since July 2004 on Wednesday, changing hands at 74.88 cents US.

The loonie was dragged lower in lockstep with a sudden sell-off in oil, which was itself sparked by new numbers out of the U.S. Energy Information Administration that showed America's oil glut continues, and China's demand for oil continues to tumble.

The Canadian dollar settled at 74.98 cents US at the end of the day, a drop of 0.37 of a cent.

The Canadian dollar actually started the day higher, up to around 75.40 cents before the IEA report showing growing stockpiles of gasoline knocked the floor out from under the oil price. After being near the $47 US per barrel level before the report, oil cratered by 3.6 per cent to $44.70 US.

There was more bad news for oil coming in the form of a major gauge of Chinese manufacturing known as the Caixin/Markit China Manufacturing Purchasing Managers' Index. It fell to 47.0 in September, its lowest since March 2009. Levels below 50 suggest a contraction.

If China's manufacturing sector is indeed shrinking, that's bad news for oil prices as it implies reduced demand for energy. And for global demand of other commodities.

Shaun Osborne, a foreign exchange strategist at Scotiabank, said traders' focus is on commodities prices and that could mean more pain for the loonie.

"That weakness that we've seen in the Canadian dollar we'll likely see in other currencies as well, as commodities prices soften. We're seeing pressure brought to bear on the Australian dollar, Brazilian real, the South African rand and other countries you see in that commodity grouping," he said.

The loonie was also spooked by retail sales data out of Statistics Canada showing that sales at stores increased by 0.5 per cent in July. That was below what economists were expecting, and especially troublesome considering July was a month during which millions of Canadians received cheques from Ottawa in the form of a Universal Child Care Benefit payment.

Wednesday's lowest trade for the loonie came in at 74.88 cents, according to Bloomberg, just below the previous low of 74.92 seen at the end of August.

Both those figures are the lowest on record for Canada's currency dating back to the summer of 2004.

"The only thing that's been keeping the loonie afloat is good domestic data and retail sales today were soft," currency analyst Adam Button of ForexLive said. "If that's the start of a series of poor economic reports, then the outlook is dire."