FINANCIAL MARKETS : CURRENCY : Trade Deficit News Helps Deflate Dollar

The dollar weakened on worldwide currency markets after the government reported a widening U.S. trade deficit during May.

Gold prices also declined here and abroad. On the Commodity Exchange in New York, gold bullion for current delivery settled at $362 an ounce, down $1.30 from late Monday.

Currency dealers said the dollar was pressured in part by a Commerce Department report Tuesday showing that May’s trade deficit jumped to $7.73 billion from a revised $7.31 billion. The increase was due to a big increase in imports of oil and cars.

Dealers keep a close watch on trade figures since they often have an impact on the dollar. For instance, dealers worry that a rise in imports will place downward pressure on the dollar in order to enhance the sale of exports.

In Tokyo, where the global trading day begins, the dollar closed at 148.20 Japanese yen, down from 148.43 late Monday. It traded at 148.32 yen in London, then at 147.80 in New York.

The Canadian dollar, meanwhile, soared to a 10-year high against the dollar, hitting 86.73 U.S. cents, breaking the 1980 record of 86.56 cents. High interest rates are bolstering the Canadian currency.