June 25, 2020 / 6:50 PM / 14 days ago

CANADA FX DEBT-Canadian dollar hits a 10-day low, weighed by ratings 'hangover'

 (Adds investor quotes and details throughout; updates prices)
    * Canadian dollar falls 0.1% against the greenback
    * Price of U.S. oil rises 1.7%
    * Canadian payroll employment falls by 1.8 million in April 
    * Canada's 10-year yield eases 3.1 basis points to 0.517%

    By Fergal Smith
    TORONTO, June 25 (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)
  
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