The Canadian dollar weakened against the U.S. dollar on Thursday as data showing U.S. inflation soared to a 40-year high in January raised expectations of an aggressive interest rate hike by the Federal Reserve.

U.S. bond yields rose and the dollar strengthened against a basket of major currencies as the U.S. consumer price index rose 7.5% year-on-year, fueling rumors of a 50 basis point interest rate hike by the Federal Reserve next month.

The Canadian dollar fell 0.3 percent to 1.2707 against the U.S. dollar, or 78.70 U.S. cents, after trading in a range of 1.2666 to 1.2717.

The currency’s decline came after the closure of a vital trade route between the U.S. and Canada due to protests against Canada’s pandemic measures began to affect automakers.

The price of oil, one of Canada’s main exports, was under pressure because nuclear talks between the U.S. and Iran could increase global crude supplies. U.S. oil prices fell 0.5 percent to $89.26 a barrel.

Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries.

The 10-year bond rose 4.7 basis points to 1.894%, approaching the peak of 1.905% reached in January, which was the highest level in nearly three years.