The Canadian dollar hit a new 11-year low today against its U.S. counterpart, as weak oil prices and a possible further interest rate cut continue to hurt sentiment in Canada's currency.

The loonie closed at 75.87 cents US, down more than half a cent from Friday's close. That's the lowest the loonie has been since it closed at 75.82 cents on Aug. 30, 2004..

'[The Canadian dollar] remains vulnerable to oil price movement in the current environment," said Scotiabank currency strategist Eric Theoret in a morning commentary.

Oil prices stabilized on Tuesday following a major sell-off on Monday that took the benchmark price of crude to a four-month low, to near $45 US a barrel. The September crude contract settled at $45.74 US a barrel in Tuesday trading. That was up 57 cents from Monday's settle price but was still $1.38 lower than Friday's close.

Theoret also noted that currency markets are forecasting a 50 per cent chance of another quarter percentage point cut in the Bank of Canada's key lending rate over the next 12 months. The central bank cut its key rate by a similar amount on July 15.

On the flip side, the U.S. Federal Reserve is widely expected to raise its key lending rate later this year — a likelihood that is helping to drive the U.S. dollar higher against the loonie.

Negative sentiment about the Canadian dollar was further reinforced last Friday when Statistics Canada reported GDP figures for May that showed the economy contracted by 0.2 per cent, against expectations of no change.

In addition to oil prices, traders say Wednesday's trade stats in Canada and the U.S. and Friday's employment numbers for both Canada and the United States will likely be the most immediate factors affecting the loonie's value.