Canadian dollar closes below 80 cents US

The Canadian dollar tumbled by three-fifthsof a cent against its U.S. counterpart Mondayafter dipping to its lowest levelin more than six weeks.

The loonieclosed at 79.78 cents US, down 0.63 cents from last Friday's close. Its intraday low of 79.60 cents US was last reached on April 13.

The Canadian dollarhas now fallenby more than four cents since reaching amid-May high of 83.86 cents US.

"U.S. releases are the key risk for [the Canadian dollar]as we consider last week's Bank of Canada statement and its optimistic tone centred on the U.S. outlook driving export-led growth," said Eric Theoret, a foreign exchange strategist at Scotiabank, in amorning commentary.

The Bank of Canada expressed optimism that the U.S. economywould start accelerating in the second half of 2015 but analysts said the central bank alsoimplied that a stronger Canadian currency would weaken the bank'soutlook on the economy.

Last Friday, Statistics Canada reported that the country's GDP shrank at a worse-than-expectedannual pace of0.6 per centin the first quarter.Analysts said the weak numbermakes it more likely that the central bank will move to cut interest rates again some time this year -- something that would cause the loonie to lose more value against the U.S. dollar.

Bloomberg News reported Monday that the currency markets are placing the odds of a 0.25 per cent cut in the Bank of Canada's key rate later this year at around60 per cent, versus 36 per cent last week.

U.S. in rate-hike mode

Adding to the negative sentiment around the Canadian dollar, the financial markets expectthe U.S Federal Reserveto hike U.S rates later this year.

Just as a rate cut in Canadawould push the loonielower, so too would a rate hike in the U.S. push the greenback higher.

"A series of strong data releases this week could further increase the momentum the [U.S. dollar]has had of late, leading up to the June 17 [Federal Reserve U.S. interest rate]decision," said RahimMadhavi of Knightsbridge Foreign Exchange.

Crude oil prices cooled on Monday-- another frequent negative for the loonie.A key oil benchmark at one point fell below $60 US a barrelon expectations that OPEC production levels would remain high. The July futures contract for light sweet crudeeventually settleddown 10cents at $60.20US.