TORONTO: The Canadian dollar weakened against its US counterpart on Monday, giving back some recent gains, as oil prices tumbled and bond markets moved to price in more aggressive tightening by global central banks.

The price of oil, one of Canada’s major exports, fell as fears over weaker fuel demand in China grew after financial hub Shanghai lockdown efforts to curb a surge in COVID-19 infections.

US crude prices were down nearly 8% at $104.84 a barrel, while the US dollar jumped against a basket of major currencies as the Bank of Japan’s move to contain rising bond yields weighed on the Japanese yen. Bond yields globally have surged in recent days as investors raised bets on the number of interest rate hikes that central banks will undertake to fight inflation.

On Friday, Bank of Canada Deputy Governor Sharon Kozicki said the pace and magnitude of interest rate increases would be actively discussed at the Bank of Canada’s April meeting.

The deputy governor didn’t “push back against market pricing which has now all but priced in a 50 bps (basis points) increase next month,” strategists at Scotiabank, including Shaun Osborne, said in a note.

Money markets see chances of a 50 basis points increase on April 13 at nearly 80%. The BoC has not hiked by that magnitude since May 2000, preferring to move in 25 basis point increments.

The Canadian dollar was down 0.7% at 1.2560 to the greenback, or 79.62 US cents, after trading in a range of 1.2474 to 1.2567.

It follows nine straight days of gains for the currency. On Friday, it touched its strongest level in more than two months at 1.2462.

The Canadian 2-year yield touched its highest since October 2008 at 2.427% before dipping to 2.387%, up 3.3 basis points on the day.