The loonie rose 0.45 of a cent to 98.23 cents US, day before the Bank of Canada makes its next announcement on interest rates. The central bank is widely expected to keep its key rate at one per cent.
Analysts pointed out that the decision by S&P was widely expected.
One bright spot was that Germany, Europe's biggest economy, retained its triple-A rating and had its outlook upgraded to stable from negative.
Also, on Monday, rival ratings agency Moody's said it was maintaining France's top-tier AAA credit rating for now with the outlook stable. S&P rates France's outlook as negative.
There was also relief as France sold €8.6 billion in short-term debt on Monday. Yields fell in a sign investors still see the country as a good bet.
But analysts said the S&P downgrades could create a problem with expanding the eurozone's bailout fund, the European Financial Stability Facility, since France is the fund's second-largest backer.
On Monday, S&P downgraded the creditworthiness of the eurozone's bailout fund by one notch to AA-plus.
Another headache for markets at the moment is whether Greece can clinch a deal with its creditors. Last October, Greece's partners in the eurozone sanctioned a deal whereby creditors agreed to reduce the value of their Greek debt holdings so that the country's burden is reduced.
The deal with private investors, known as the Private Sector Involvement, or PSI, aims to reduce Greece's debt by €100 billion by swapping private creditors' bonds for new ones with a lower value. It is a key part of a €130-billion international bailout, the second one for Greece.
Talks broke off Friday but it is expected that negotiations on the PSI will resume sometime this week.
Commodity prices advanced with the February contract on the New York Mercantile Exchange ahead 99 cents to US$99.69 a barrel in electronic trading late in the afternoon.
March copper added four cents to US$3.68 a pound and February gold gained $12.70 to US$1,643.50 an ounce.