The loonie was down 0.24 of a cent to 91.42 cents US as the central bank signalled it is in no rush to raise rates from that level, where it's been since September 2010 as the global economy continues its slow recovery.
"The Canadian dollar fell lower on the Bank of Canada continuing to harp a tone of we're still nowhere close to raising interest rates," said Rahim Adhavji at Knightsbridge Foreign Exchange.
"It seems that the Bank of Canada is quite content with the lower Canadian dollar boosting exports and assisting with inflation."
Traders also digested data that showed Canada's trade balance slipped into deficit territory during April. Statistics Canada said Canada's merchandise exports declined 1.8 per cent while imports increased 1.4 per cent, taking Canada's trade balance with the world from a surplus of $766 million in March to a deficit of $638 million.
In addition, traders are also awaiting an announcement on possible stimulus measures aimed at helping the eurozone recovery and the release of U.S. and Canadian jobs numbers coming out at the end of the week.
Markets are counting on European Central Bank president Mario Draghi to announce measures Thursday that will give a lift to the eurozone's weak recovery and save the region from falling into a deflationary spiral that would choke off growth.
Worries about deflation increased Tuesday in the wake of data showing that inflation in the eurozone came in at 0.5 per cent in May, down from 0.7 per cent in April. The latest data also showed that gross domestic product in the eurozone grew by a paltry 0.2 per cent in the first quarter.
Analysts are looking at a variety of options for the ECB, including an interest rate cut or a form of quantitative easing.
On Friday, traders will see if there will be a strong reading from the U.S. non-farm payrolls report. Economists forecast that about 219,000 jobs were created during May following a much stronger expected 288,000 gain in April.
Ahead of that report, payroll firm ADP reported Wednesday that the U.S. private sector created 179,000 jobs last month.
Canadian job figures for May also come out Friday and economists expect about 21,000 jobs were created after the economy shed 29,000 the previous month.
On the commodity markets, the July crude contract on the New York Mercantile Exchange slipped two cents to US$102.64 a barrel.
August bullion faded 20 cents to US$1,244.30 an ounce and July copper fell four cents to US$3.09 a pound.