Canada now has a 70-cent dollar.

The loonie dipped under the 70-cent (U.S.) level, touching as low as 69.9 cents, having rallied earlier to as high as 70.5 cents. It was hovering at just above 70 cents by late afternoon.

The currency has been largely hit by oil prices, which dipped below $30 a barrel at one point today, the domestic economic outlook and the different timelines for interest rates in Canada and the United States.

The loonie is now at its lowest level since the spring of 2003. And it’s expected to go lower still before climbing again later this year, based on current forecasts for oil prices. Of course, analysts are now trimming those projections, as well.

Bank of America Merrill Lynch, for one, said it expects to see the loonie at just shy of 69 cents by the end of the first quarter.

“Amidst heightened geopolitical tension between Saudi Arabia and Iran - two staunch regional rivals - an intra-OPEC price war is likely to keep further pressure on oll,” Bank of America currency strategist Ian Gordon said in a report that dubbed the loonie “the perennial underperformer.”

“In our view, CAD’s correlation with oil will stay high or move higher, and with oil prices in the $25 to $35 a barrel range, Canadian oil sands projects need to justify keeping the pumps open,” he added.

In an interesting twist, Mr. Gordon said he believes the currency is nonetheless overvalued relative to prices on commodities, which mean so much to the Canadian economy.

“According to our commodity model which takes into account both energy and non-energy commodity prices, the Canadian dollar remains around 5-per-cent overvalued,” he said.

Currency traders, of course, focus on the other way of looking at the loonie and psychological impacts tend to come when the inverse hits a big round number.

So, for example, that 69-cent mark is 1.45 (Canadian).

But 70 cents (U.S.) will resonate among Canadian consumers.

When you go below that, said Scotiabank chief foreign exchange strategist Shaun Osborne, the realization of even higher costs for things such as imported fruits and vegetables, imported vehicles and that trip to the United States hits home.

The loonie, of course, has been buffeted time and again by the extreme gyrations in the oil market.

“Traders are still pushing oil prices around by as much as $3 within a matter of days just like when the price was $100 per barrel, but with prices now at $30 a barrel, what was a 3-per-cent move has become a 10-per-cent roller coaster,” said analyst Jasper Lawler of CMC Markets.