The Canadian dollar today dipped to just below the 75-cent US level for the first time in more than a decade.

The loonie fell below the psychologically important threshold in the afternoon, closing at 74.96 cents US after the recovery in North American stock markets lost steam.

The outlook for the Canadian dollar is uncertain, because there are doubts over whether the U.S. Fed will raise rates in September in light of the current market turmoil. At the same time, Bank of Canada Governor Stephen Poloz might be tempted to cut rates, which would also push the dollar lower.

The loonie's dive came despite oil prices that were rallying up three per cent after cratering on Monday. The main WTI contract was changing hands at $39.28 US on Tuesday, up 2.7 per cent from Monday, when it hit a six-year low.

Oil has been sliding since the beginning of the summer after bouncing above $60 in June.

Brent crude, the main international contract, rose to $43.27 and Western Canada Select, a Canadian oilsands contract, stood at $24.72 on Tuesday.

For most North American producers, that price is below the cost of production.

Commodities such as gold and copper continued to fall on fears that China, one of the biggest markets, would have a protracted economic slowdown. The Chinese stock market fell another 7.6 per cent on Tuesday.

But markets in Europe and North America rebounded with triple-digit gains after steep losses the past three days. Many analysts believe the markets are now oversold and some investors are seeking bargains.

That rally lost its impetus in the final hour of trading and the Dow ended down 205 points, while the TSX trimmed its gain to 98 points.

Rising stocks helped oil recover, though the long-term threat is the global oversupply of crude. OPEC has stepped up production at the same time U.S. shale producers are pumping out more oil than the U.S. can store, let alone use.

"The impact of China's recent struggles on the global economy is still very uncertain," currency trader Rahim Madhavji of Knightsbridge FX said in a note to investors.

"Some have suggested that these struggles will delay the timeline of a rate hike from the Fed. Relative monetary policy as well as oil prices will continue to be the main drivers of the Canadian dollar in the short term."