The Canadian dollar hit a one-month low on risk aversion

The exchange rate of the Canadian dollar fell to a monthly low against the U.S. dollar amid falling stock markets and oil prices. At the same time, investors were expecting a possible interest rate cut by the Bank of Canada.

Jay Zhao-Murray, a market analyst at Monex Canada Inc, said the combination of risk-off equity trading and decreasing prices of crude oil appear to be taking a toll on the Canadian currency.

According to Zhao-Murray, bidders may also be betting against the dollar ahead of tomorrow's Bank of Canada meeting. Because if the Bank of Canada chooses the path of least resistance, it could cut rates by 25 basis points, Zhao-Murray said.

Money markets are betting on a 25-basis-point rate hike Wednesday when the Bank of Canada determines its policy. Meanwhile, there is about a 25 percent chance that the central bank will raise rates by 50 basis points, as it did in October.

Canada's trade surplus rose to C$1.2 billion ($878.2 million) in October on higher exports and imports.