The loonie lost 0.36 of a cent to 95.5 cents US as the Organization for Economic Co-operation and Development cut its 2014 forecast for global growth to 3.6 per cent from four per cent. The OECD cited U.S. fiscal uncertainty, the impact of the Federal Reserve tapering its asset purchases and weakness in emerging markets.
The OECD also said interest rate hikes could be closer than thought. It said the Bank of Canada may need to start hiking its trendsetting interest rate from one per cent within the next year and steadily push it to 2.25 per cent by the end of 2015.
It said the central bank may have to start tightening by late next year in order to avoid a buildup of inflationary pressures as spare economic capacity narrows.
Commodity prices were mixed with December crude 31 cents higher at US$93.34 a barrel.
December copper edged up a penny to US$3.16 a pound while December gold bullion climbed $1.20 to US$1,273.50 an ounce.
In economic news, a key index of optimism about the German economy rose more than expected in November. The ZEW index rose to 54.6 points from 52.8 points in October, above the 54.0 expected on average by analysts.
Traders also looked to developments later in the week that could provide clues as to when the Federal Reserve might think the U.S. economy is strong enough to allow the central bank to start cutting back its monthly US$85 billion of asset purchases.
U.S. retail sales will be released Wednesday morning while in the afternoon the Fed releases the minutes from its most recent interest rate meeting from late last month.