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The Canadian dollar CADUSD weakened to a three-week low against its U.S. counterpart on Thursday as Wall Street stocks fell and data showed Canada’s trade balance swinging to a surprise deficit.

The loonie was trading 0.6% lower at 1.3358 to the greenback, or 74.86 U.S. cents, after touching its weakest intraday level since June 13 at 1.3369.

“We had a dreadful trade number,” said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. “The market was looking for a surplus and it comes in as a deficit.”

Canada recorded a trade deficit of C$3.44 billion in May as energy and grains dragged down exports and unwrought precious metals and motor vehicles contributed to a surge in imports. Analysts had forecast a C$1.15 billion surplus.

Wall Street’s main indexes fell sharply after U.S. data showing a strong labour market drove up bond yields and fanned fears that the Federal Reserve will be aggressive in raising interest rates.

Investors worry that central bank rate hikes could trigger a recession, reducing demand for the commodities that Canada produces. Other commodity-linked currencies, such as the Australian and New Zealand dollars, also lost ground.

“The kind of currencies that I would put in a bucket and say are levered to growth are under pressure,” Chandler said.

The Bank of Canada will raise interest rates by a quarter-point for a second straight meeting to 5.00% on July 12, according to a Reuters poll.

A Canadian dock workers strike is another factor for the BoC to consider ahead of its policy announcement because the longer it drags on, the greater the risk of supply-chain disruptions that fuel inflation, economists said.

The Canadian 10-year yield touched its highest level since November at 3.559% before dipping to 3.490%, up 7.6 basis points on the day.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/02/24 8:22am EST.

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Canadian Dollar/U.S. Dollar

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