09/25/2014 13:52 EDT | Updated 11/25/2014 05:59 EST

Canadian dollar below 90 cents as markets head down

The Canadian dollar went below 90 cents US today, pressured by a stronger U.S. dollar and a steep slide in stock markets.

The loonie declined 0.46 of a cent to 89.98 cents US in morning trading, then bounced up to 90.13 in the afternoon.

Canada's main stock index dropped for a fifth straight session, taking it the TSX/S&P index below 15,000 for the first time since May. The Toronto market was down 231 points, or 1.4 per cent, at 14,888 by early afternoon.

North American stocks took a steep fall, with the Dow down 255 points at 16,954 and S&P 500 index down 30 points at 1967.

Stocks have been turbulent this week after a summer of optimism. Earlier this week there was concern about slowing growth in China and falling U.S. home sales.

On Thursday, there was more bad news about the U.S. economy, including a drop in orders for U.S.-manufactured goods and fewer business orders for new equipment.

There were also indications of widening unemployment, with 293,000 people applying for benefits on a seasonally adjusted basis, down from estimates but up from the previous two weeks.  

Apple helped to pull the Dow lower, diving 3.5 per cent after it was forced to pull an update to its iOS 8 operating system. In a rare stumble, the world's biggest technology company apologized to customers after an update to iOS 8.0.1 left some iPhone users unable to make or receive calls.

U.S. dollar strong

The Canadian dollar has been hard hit this week by the steady gains in the U.S. greenback.

Investors believe that the U.S. Federal Reserve is heading nearer towards a rate hike, in contrast to the European Central Bank, which is cutting rates and buying assets.

"The theme driving the U.S. dollar continues to be a strengthening U.S. economy relative to other economies," said Rahim Madhavji of Knightsbridge Foreign Exchange in a note.

"However, with Canada's economy closely tied to the U.S. economy over time, Canada should eventually benefit from a strengthening U.S. economy."

There is also a widespread perception that stock markets are due for a pullback.

Analyst John Ing of Maison Placements Canada says the Toronto equity markets have run ahead of fundamentals.

And a report out earlier this week showed the ultra-wealthy are not investing at the current time, but keeping their assets in cash. Many see this as a sign of lack of confidence in the bull market.

Low commodity prices have also affected the Canadian market, with oil, gold and copper falling.

WTI oil futures in New York were selling at $94.28 a barrel today, and remained unaffected by the bombing of oilfields in Syria overnight.

At least four oil installations and three oil fields that sell oil on behalf of the militant group ISIS were hit around the town of Mayadeen. The group is estimated to earn $3 million US a day from oil revenues.

However, oil exports from Syria to the U.S. or EU have been banned since March 2011, so the strike doesn’t affect North American oil supply.