TORONTO, June 3 (Reuters) - The Canadian dollar weakened to an eight-week low against its U.S. counterpart on Wednesday as escalation in the global trade and Middle East wars hurt investor sentiment.
The loonie was trading 0.4% lower at 1.3899 per U.S. dollar, or 71.95 U.S. cents, marking its lowest level since April 7.
Gulf hostilities flared again as Iranian attacks on Kuwait damaged its airport and injured dozens while the U.S. military carried out strikes near the Strait of Hormuz, with diplomacy to halt the war showing little sign of progress.
The Trump administration has proposed new tariffs of up to 12.5% on imports from 60 economies, including Canada, after determining they had failed to curb trade in goods made with forced labor, an assertion that was rejected by U.S. trading partners.
"We've got the intensification of two U.S. shocks," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "All the currencies are sucking wind today."
The U.S. dollar rose against a basket of major currencies and stocks on Wall Street fell. The price of oil, one of Canada's major exports, was trading 2.6% higher at $96.14 a barrel.
Canadian GDP data "had already put the Canadian dollar on thin ice," Chandler said.
On Friday, data showed that Canada's economy contracted at an annualized rate of 0.1% in the first quarter after a downwardly revised contraction of 1% in the previous quarter.
Canada's services economy expanded at a modest pace in May as the Middle East conflict raised economic uncertainty and higher fuel prices contributed to the fastest increase in operating costs in four years, S&P Global's Canada services PMI data showed on Wednesday.
Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 2.1 basis points at 3.436%.
Reporting by Fergal Smith; Editing by Nia Williams
