Oil fell after Saudi Arabia ruled out production cuts and an industry report said US crude stockpiles hit a record, underlining the supply glut.
US crude prices were down 3.67 percent to $30.70 a barrel.
Global equity markets fell sharply, adding to headwinds for the risk-sensitive commodity currency.
Moreover, Canada's second-largest lender by assets showed increasing signs of pain from the oil price crash and economic slowdown in Western Canada.
At 9:15 a.m. EST (1415 GMT), the Canadian dollar was trading at C$1.3854 to the greenback, or 72.18 US cents, weaker than the Bank of Canada's official close of C$1.3768, or 72.63 US cents.
The currency's strongest level of the session was C$1.3772, while it hit its weakest since Feb. 17 at C$1.3860.
It lost even more ground against the Japanese yen, hitting its lowest since Feb. 12 at 80.59 yen.
Bank of Canada Deputy Governor Lawrence Schembri will address the topic of elevated household debt and the risk to financial stability. His speech will be available at 12:35 p.m. EST (1735 GMT).
Canada's ruling Liberals will cap the coming year's budget deficit at C$30 billion ($21.81 billion) as they try to stick to long-term budget plans, Reuters reported on Tuesday after speaking with senior government sources.
The government said on Monday it will stick to plans to invest in infrastructure projects. Adding private-sector investment to projects could spur even greater spending, reducing the odds of another Bank of Canada rate cut.
Canadian government bond prices were higher across the maturity curve, with the two-year price up 1 Canadian cent to yield 0.461 percent and the benchmark 10-year rising 19 Canadian cents to yield 1.099 percent.
The Canada-US 10-year spread was 3.5 basis points higher at -58.9 basis points as Treasuries outperformed on the flight to safety.
The Bank of Canada will conduct a C$3.7 billion two-year auction on behalf of the Government of Canada. The bidding deadline is 12:00 p.m. EST (1700 GMT).
Canada's housing market will be a net contributor to economic growth in the coming year, boosted by rising prices, but become a drag soon after due to a slowdown in buying and high levels of household debt, a Reuters poll found.