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Loonie flying lower

The Canadian dollar was slightly lower Tuesday morning amid wrangling over dealing with more bailout money for Greece and worries about the approaching "fiscal cliff" in the United States.

The loonie was down 0.02 of a cent from Friday's close to 99.85 cents US. The loonie wasn't traded in Canada on Monday as banks were closed for the Remembrance Day holiday.

The looming end-of-year deadline over the expiration of Bush-era tax cuts and the automatic launch of massive spending cuts at the end of the year continued to cast a pall over markets. Economists reckon that such a scenario, the so-called fiscal cliff, would take a big chunk out of economic growth, likely pushing the U.S. back into recession and taking other economies down with it.

Traders also looked ahead to updated budget forecasts later in the day by finance minister Jim Flaherty.

"(The update) is likely to increase the focus on the risks that the U.S. fiscal cliff negotiations pose to the Canadian economy," observed Scotia Capital chief currency strategist Camilla Sutton.

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