TORONTO: The Canadian dollar fell versus its US counterpart on Friday, touching a seven-week low as concerns over surging COVID-19 infections in Europe battered riskier currencies, but the loonie reversed some losses after better-than-expected retail sales numbers.

The Canadian dollar dropped 0.37% to 1.2648 against the greenback, or 79.06 US cents, and earlier traded as low as 1.2662, its weakest since Oct 1st. For the week, the loonie was down around 0.8%, marking its fifth straight weekly decline.

“Two things are working against Canada,” said Joe Manimbo, senior market analyst at Western Union Business Solutions. “One has been the flight to safety in the greenback and the other is the rout in oil markets.”

Austria said it will become the first country in western Europe to reimpose a full coronavirus lockdown to tackle a new wave of COVID-19 infections, and will require its whole population to get vaccinated as of February.

Germany, which is experiencing a fourth wave of infections, warned it may follow suit, sending shivers through financial markets worried about the economic fallout.

The price of oil, one of Canada’s main exports, fell sharply on Friday toward $78 a barrel as the fresh surge in COVID-19 cases in Europe threatened to slow the economic recovery. US crude prices were down 3.67% to $76.11 a barrel, while Brent crude lost 3.00% to $78.81.

Other commodity-linked currencies, including the Australian and New Zealand dollars, were also down as investors fled to save-haven currencies like the US dollar and the Japanese yen.

The Canadian dollar did get some support, lifting off of its lows, after data showed retail sales declined 0.6% in September, which was less than the consensus forecast of a 1.7% drop. Retail sales are expected to have risen in October by 1%, the report said.

“The better-than-expected retail sales definitely gave it a boost,” Eric Theoret, global macro strategist at Manulife Investment Management, said of the currency.