01/09/2014 01:17 EST | Updated 03/11/2014 05:59 EDT

Loonie continues slide below 92 cents US

The Canadian dollar continued to drop on Thursday, sinking below 92 cents US before recovering in early trading.

The currency is at its lowest level since the fall of 2009, hammered by strong economic news in the U.S. and lower oil prices, and a widening Canadian trade deficit. At midday it was trading at 92.14.

The U.S. trade deficit has dropped 12.9 per cent to $34.3 billion, according to commerce department numbers released earlier this week, but Canada’s trade deficit expanded to $940 million.

After a long period in the early 2000s when Canada consistently racked up trade surpluses, the country has been in a deficit position since 2009.

One of the problems is an economy heavily reliant on oil exports, at a time of declining oil prices. Today’s oil futures for February delivery were down  29 cents in New York to $92.04 US a barrel after flirting around $110 most of last year.

Jim Stanford, an economist with Unifor, Canada’s largest private-sector trade union, estimates the high loonie has cost Canada about 500,000 jobs over the last five years.

Exports plunged from 44 per cent of GDP in 2000 to just 30 per cent last year, he said in a Globe and Mail op-ed piece. He welcomed the falling loonie, saying it should help manufacturing industries recover.

Today, lower housing starts for December and a drop in building permit applications put further pressure on the Canadian dollar.

Meanwhile, investors are returning to the greenback after the Fed began to cut back on its monthly bond-buying program amid a slew of indicators of an economic recovery.

On Thursday morning, the U.S. Labour Department reported that applications for jobless insurance fell by 15,000 last week to 330,000. More U.S. job creation numbers are expected tomorrow.

In November, New York investment house Goldman Sachs recommended shorting the loonie, predicting it could go as low as 88 cents.

While a lower dollar makes travel outside Canada more expensive, it can boost the Canadian economy by making Canadian goods cheaper for international buyers.