The Canadian dollar weakened to a three-week low against its US counterpart on Wednesday after other risk-sensitive currencies declined amid concerns that US debt ceiling talks may not be making enough headway.

The loonie traded 0.6% lower at 1.3590 Canadian dollars per greenback, or 73.58 US cents, after hitting 1.3605, its lowest intraday level since May 4th.

“I think it’s worrying that there are no clear signs of a quick deal (on the debt ceiling) at this point,” said Shaun Osborne, chief currency strategist at Scotiabank. “Currencies are likely to experience a period of turbulence over the next week.

The safe haven US dollar rose against a basket of major currencies and Wall Street stocks fell as it came time for the US to raise its debt ceiling and avoid a default. At the end.

The declines in the dollar bloc’s other currencies, the Australian dollar and New Zealand dollar, were even steeper than the loonie as the Reserve Bank of New Zealand announced an end to rate hikes.

“The Canadian dollar is likely to be hurt today by the sharp decline in the Australian dollar and New Zealand dollar,” Osborne said.

Meanwhile, oil prices rose nearly 2% to $74.34 a barrel after U.S. crude stocks fell sharply than expected and Saudi Arabia’s energy minister issued a warning that raised the prospect of further OPEC+ output cuts. Oil is one of Canada’s most important export products.

Canadian government bond yields rose across the curve on movements in US Treasuries. The 10-year bond hit 3.283%, its highest since March 9, before falling to 3.266%, up 5.4 basis points on the day. (Reporting by Fergal Smith, editing by Nick Zieminski)