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The Canadian dollar weakened against its U.S. counterpart on Tuesday as rising coronavirus cases weighed on investor sentiment, but a recovery in oil prices helped the loonie recoup some of its decline.

The Canadian dollar was trading 0.2% lower at 1.3095 to the greenback, or 76.37 U.S. cents, having traded in a range of 1.3063 to 1.3116.

Wall Street’s main indexes fell, with the S&P 500 and the Dow retreating from record closing highs hit a day earlier, following disappointing U.S. retail sales data and a spike in COVID-19 cases across the country.

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Canada sends about 75% of its exports to the United States, including oil.

U.S. crude oil futures reversed an earlier decline to settle 0.2% higher at $41.43 a barrel. Hopes for a COVID-19 vaccine and the possibility of tighter supply policies from OPEC and some other major producers offset surging virus infections.

“There is a gradual recoupling of oil and the Canadian dollar under way at the moment,” said Adam Button, chief currency analyst at ForexLive.

“As the market transitions towards a post virus mode, everything in Canada becomes much more attractive; from banks to commodities to economic growth,” Button said.

Canadian wholesale trade increased by 0.9% in September from August, beating analyst expectations, while separate data showed that housing starts rose 3% in October compared with the previous month.

Canada’s inflation report for October is due on Wednesday.

Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries. The 10-year fell 3.2 basis points to 0.706%.

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Climate change will have a profound impact on Canada’s economy and the country must mobilize quickly to mitigate the threat as well as capitalize on opportunities, Bank of Canada Governor Tiff Macklem said.

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