TORONTO – The Canadian dollar was at a fresh 5 1/2 year low Wednesday morning as traders continued to shun risky assets such as equities and commodity-based currencies.

The loonie fell 0.49 of a cent to 87.96 cents US while investors opted for safety and bought into the U.S. currency. The benchmark U.S. Treasury yield stood at 2.15 per cent, down from 2.3 per cent at the end of last week.

“All eyes are once again on the risk fallout across a number of markets (but sorely concentrated in oil) with little in the way of let up overnight,” said Mark Chandler, head of Canadian FIC Strategy at RBC Dominion Securities.

“The weakness in oil prices is spilling over in a nasty fashion in Canada.”

The commodity-sensitive Canadian currency has also suffered from oil prices that have plunged recently to 2 1/2 year lows after the International Energy Agency slashed its oil-demand growth forecast for this year by more than a fifth. The November crude contract fell a further 54 cents Wednesday morning to US$81.30 a barrel.

The higher U.S. dollar helped depress other commodities as December copper gave back three cents to US$3.06 a pound while December bullion faded $4.10 to US$1,230.20 an ounce.

On the economic front, U.S. retail sales for September came in weaker than expected, falling 0.3 per cent amid broad weakness, against the 0.1 per cent decline that economists had expected.

Traders hope to see that the U.S. economy is still the global outperformer when the Fed releases its latest survey on regional economic conditions mid-afternoon. The last survey showed continued growth and improving labour markets. But the latest instalment could also reflect rising concerns about global economic weakness and the higher dollar.