Loonie falls as central bank keeps interest rate at 1 percent

The value of the Canadian dollar dropped on Wednesday against its southerly rival as the monetary unit tracked the downward drive of crude oil futures, the top commodity of the natural-resources-rich nation, Bloomberg reports.

Thus far this year, the loonie has climbed 2.4 percent against the world's reserve currency - the USD - establishing the Canadian currency as the third-best performer on the Bloomberg Correlation-Weighted Indexes. The dollars of Australia and New Zealand, both of which also are linked with commodities, are ahead.

"For commodity currencies, it's not just a simple risk-on, risk-off trade you saw after the 2008 crisis," senior currency strategist Jane Foley with Rabobank International in London told Bloomberg. "You have this diversification trade going on alongside that, which can complicate the picture."

Wednesday is likely to see the release of a report outlining the Bank of Canada's monetary policy, which is likely to impact the value of the loonie.

As expected, The Bank of Canada opted to leave interest rates intact at 1 percent during the Tuesday meeting, according to The Canadian Press. But the body did note it is inclined to hike that rate in the future.