Oil prices fell more than 4 percent on Tuesday, extending their decline on Monday, as hopes for a deal between OPEC and Russia on output cuts faded.
World stocks dipped after a three-day run of gains as the drop in oil prices sparked renewed nerves.
Fellow commodity currency the Australian dollar also fell after the Reserve Bank of Australia left rates on hold at 2 percent, but left the door open to further easing.
At 9:12 a.m. EST (1412 GMT), the Canadian dollar was trading at C$1.4080 to the greenback, or 71.02 US cents, much weaker than Monday's official close of C$1.3930, or 71.79 US cents.
The currency's strongest level of the session was C$1.3940, while C$1.4080 was its weakest. The currency touched on Monday its strongest since Jan. 5 at C$1.3908.
Renewed pressure on crude oil prices has left the market fully discounting a July interest rate cut from the Bank of Canada after implying a 90 percent probability on Monday.
Nonetheless, the Canadian dollar has rallied more than 4 percent since hitting on Jan. 20 its weakest since 2003 at C$1.4689.
Canadian government bond prices were higher across the maturity curve on the flight to safety. The two-year price was up 6.5 Canadian cents to yield 0.387 percent and the benchmark 10-year rose 54 Canadian cents to yield 1.171 percent.
The curve flattened, as the spread between the 2-year and 10-year yields narrowed by 2.5 basis points to 78.4 basis points, indicating outperformance for longer-dated maturities.
The Canada-US 10-year spread was 0.7 of a basis point less negative at -72.9 basis points as Treasuries outperformed.
Canadian employment data for January and trade data for December are due on Friday.