The Canadian dollar traded below parity with the U.S. greenback on Monday, just one day before a scheduled announcement on interest rates from the Bank of Canada.
"There is a real possibility that the central bank will lower its benchmark interest rate," BNN's Michael Kane told CTV's Canada AM on Monday.
However, Kane cautioned that analysts remain divided on whether cuts will be made.
The dollar opened trading at 99.62 cents US Monday, marking the first opening in weeks below parity. By late morning, the dollar was hovering around 99.79 cents US.
The loonie closed above parity with the U.S. greenback for the first time in more than three decades last September. By early November, the dollar had passed 110 cents US.
But recently, the dollar has been bouncing around and below parity.
The loonie, often referred to as a 'petro-currency,' also took a hit because of a drop in oil prices.
"Crude oil continues to weaken and gold and copper prices are also lower today, making life difficult for commodity currencies,'' said a commentary from Scotia Capital.
Prices for light sweet crude oil dropped 92 cents to US$87.79 per barrel on the New York Mercantile Exchange Monday.
The drop comes as speculation grows that OPEC may boost output at its meeting this week.
On Sunday, one of the founders a website designed to help motorists find the best deals at the pump said Canadian drivers could see record prices if crude oil stays in the $90-a-barrel range.
Jason Toews, of GasBuddy.com, told The Canadian Press that prices could hit as high as $1.50 per litre this spring.
"Right now people are so price sensitive. We're looking around for a better deal and we'll actually drive across the street or several blocks out of the way for an extra penny or two discount on gas,'' he said.
"The station owners know this and this is reflected in their pricing. If they're priced too high, people will go elsewhere. At a retail level it's a very cutthroat business right now and the gas stations themselves aren't making that much money off of gasoline.''
