TORONTO (Reuters) - The Canadian dollar slipped to a 10-day low against its U.S. counterpart on Thursday, as investors digested the loss of one of Canada’s triple-A ratings and worried that a rise in American coronavirus cases could slow economic recovery.
The Canadian dollar was trading 0.1% lower at 1.3650 to the greenback, or 73.26 U.S. cents. The currency touched its weakest intraday level since June 15 at 1.3670.
“The weakness in the CAD today is the result of headline hangover from yesterday’s decision by Fitch to lower the credit rating of Canada,” said Scott Smith, managing partner at Viewpoint Investment Partners.
Fitch on Wednesday cut Canada’s rating to “AA+” from “AAA,” making it the first time since August 2004 that the ratings agency did not give Canada top marks. Canada had been one of a handful of countries with a AAA rating from all three of the main agencies.
“While in the grand scheme of things this doesn’t signal a catastrophe for the government of Canada, it does provide a convenient narrative for the loonie to selloff in the face of a decrease in risk appetite,” Smith said.
Global equity benchmarks were little changed as investors gauged the potential economic impact of a surge in novel coronavirus infections in the United States, while perceived safe-haven assets, including U.S. Treasuries and the U.S. dollar, edged higher.
Canada is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global economic outlook.
U.S. crude oil prices settled 1.9% higher in a volatile session, buoyed by signs of a marginal improvement in the U.S. economy and a tepid rise in fuel demand.
Canadian payroll employment fell by 1.8 million in April as non-essential businesses were closed, data from Statistics Canada showed.
Canada’s 10-year yield eased 3.1 basis points to 0.517%.
Reporting by Fergal Smith; Editing by Steve Orlofsky and Grant McCool