The Canadian dollar continues to trade weak against the US dollar a day after it weakened by 0.5% after Fitch downgraded Canada’s sovereign rating below AAA, taking it to AA+ as a result of the coronavirus pandemic and its impact. At the time of writing, USD/CAD is trading around 1.363.

On Wednesday, leading ratings agency Fitch cut the sovereign rating for Canada from AAA to AA+ as a result of deteriorating public finances in the wake of the coronavirus crisis. This was the first time Canada’s rating has fallen below AAA since August 2004.

USD/CAD also received a boost due to weakening crude oil prices over the past session, with US oil sliding below the $40 level on a surprising build up in crude inventories across the US. The Loonie is closely correlated with crude oil prices as Canada is a key exporter of oil.

Further bullishness in USD/CAD has been driven by a strengthening in the US dollar against other currencies in the wake of the risk-off mood prevailing in markets over worries about the recent spike in coronavirus cases across the US and other parts of the world. Traders worry that an uptick in cases could prompt governments to reimpose lockdown restrictions, which could further delay chances of economic recovery in the aftermath of the pandemic.