The Canadian dollar drifted lower to another seven-month low Wednesday morning.

The loonie was down 0.26 of a cent to 98.57 cents US.

The dollar has fallen about two US cents since the start of the year centred on fears of massive U.S. government spending cuts, the housing market and oil prices.

There are worries about the looming sequester in the U.S. That is a huge package of across the board spending cuts worth US$85 billion that are set to take effect at the end of the month unless lawmakers can agree on other cuts that would be more selective.

It would cut a big chunk out of American economic growth, a worrisome prospect for a struggling economy.