* Canadian dollar weakens 0.5% against the greenback
* Hits weakest since July 7 at 1.3348
* Price of U.S. oil settles 2.3% lower
* 10-year yield touches a three-week high
TORONTO, Aug 2 (Reuters) - The Canadian dollar weakened to a near four-week low against its U.S. counterpart on Wednesday as Fitch's move to downgrade the U.S. government's credit rating sparked a selloff in risk-sensitive currencies.
Wall Street stocks fell and the safe-haven U.S. dollar rose against a basket of major currencies as Fitch downgraded the United States to AA+ from AAA. Data showing a larger-than-expected increase in U.S. private payrolls in July added to support for the greenback.
Canada is a major producer of commodities, including oil, so it tends to be sensitive to risk appetite. Oil gave back some recent gains, settling 2.3% lower at $79.49 a barrel.
"It's like a bad hair day for Canada," Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "Everything that could go wrong with the loonie is going wrong today."
The Canadian dollar was trading 0.5% lower at 1.3342 to the greenback, or 74.95 U.S. cents, after touching its weakest intraday level since July 7 at 1.3348.
Investors were waiting for the release of Canadian jobs data on Friday for clues on the strength of the domestic economy. Economists forecast a 21,100 jobs gain.
Canadian government bond yields were mixed across a steeper curve, tracking moves in U.S. Treasuries. The 10-year touched its highest since July 10 at 3.652% before dipping to 3.606%, up nearly one basis point on the day. (Reporting by Fergal Smith; Editing by Kirsten Donovan)
