The Canadian dollar hit its lowest level in more than 12 years on Wednesday — briefly trading below 71 cents US — while the price of the main Canadian oil blend dropped to a record low.

The loonie closed at 71.02 cents US, down 0.46 of a cent. At one point, it traded as low as 70.88 cents US. That's the lowest level for Canada's currency since the summer of 2003, when the dollar was on a multiyear march upward from below 62 cents, which it hit briefly in 2002.

The main catalyst for the loonie's decline was oil, as the price of West Texas Intermediate lost another $2 US per barrel, settling at $33.97 US. That's less than the lowest closing price for WTI during the depths of the recession, when it hit $33.98 a barrel in February 2009.

WTI headed lower after data from the U.S. showed gasoline inventories surged the most in 22 years and crude supplies at the American storage hub in Oklahoma climbed to a record high.

New low for Canadian oil

Oil from Canada, meanwhile, fared even worse, trading as low as $19.81 US per barrel. That's the spot price for Western Canada Select, the blend of oil that comes from Canada's oilsands and often trades at a steep discount to WTI because it is harder to process.

At under $20 a barrel, that's the lowest price on record for WCS since the blend was created in December 2004 by Cenovus, Canadian Natural Resources Limited, Suncor and Talisman

At that level, many Canadian producers can't cover the cost of production, blending and transportation.

Rising geopolitical risk, such as the possibility of conflict between Saudi Arabia and Iran and Tuesday's news that North Korea may have detonated a hydrogen bomb, was also a negative for the loonie.

On Tuesday, Bank of Montreal chief economist Douglas Porter told a gathering of leading economists that the loonie could fall below 70 cents US before it begins to recover. In an afternoon currency commentary on Wednesday, he noted that the Canadian dollar is also being pressured by "mounting chatter over a possible rate cut by the [Bank of Canada]."

Stock market losses

Oil and the Canadian dollar weren't the only casualties as global jitters and worries about China's growth prospects created pessimism among investors. North American stock markets ended the trading day with triple-digit losses.

The benchmark index of the TSX fell 193 points, or 1.5 per cent, to close at 12,727 — the sixth straight losing session for the Toronto exchange. The energy sector plunged 3.7 per cent, while the heavily weighted financial group lost 1.8 per cent.

In New York, the selling was just as steady. The Dow Jones industrial average also shed 1.5 per cent, dropping 252 points to close at 16,907.

The broader S&P 500 index lost 26 points, or 1.3 per cent, to 1,990. That's its lowest close in three months.

Gold stocks were among the few winners, as the price of the precious metal gained $13.50 US an ounce to $1,091.90 US an ounce.