TORONTO: The Canadian dollar weakened to its lowest level in more than seven weeks against its US counterpart on Thursday as broader gains for the greenback offset hawkish comments by Bank of Canada Governor Tiff Macklem.

The US dollar surged to its highest levels in two decades against a basket of major currencies, propelled by widespread weakness in its major rivals, such as the yen and the euro.

The price of oil, one of Canada’s major exports, edged lower as investors weighed up tightening Russian supplies and the prospect of dwindling fuel demand in China.

US crude oil futures dipped 0.3% to $101.67 a barrel, while the Canadian dollar was trading 0.4% lower at 1.2867 to the greenback, or 77.72 US cents. It touched its weakest since March 9 at 1.2879.

Still, only the Swedish crown posted a smaller decline among G10 currencies.

Canada’s economy is overheating, creating domestic inflationary pressures, and higher interest rates are needed to cool things down, Macklem told a Senate committee on Wednesday.

Money markets are pricing in half-percentage-point hikes by Canada’s central bank at each of its next two policy decisions, which would lift the benchmark rate to 2%. The BoC estimates that the range between 2% and 3% is a neutral setting for Canada’s economy, neither stimulating nor weighing on activity.

Canadian payroll employment rose by 142,900 in February, paced by gains in the services-producing sector, data from Statistics Canada showed.