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The Canadian dollar CADUSD weakened to its lowest level since December against its U.S. counterpart on Thursday as Russia’s invasion of Ukraine triggered a flight to safety in global financial markets.

The loonie was trading 0.5% lower at 1.2800 to the greenback, or 78.13 U.S. cents, after touching its weakest intraday level since Dec. 22 at 1.2877.

“War will always create a safe-haven play for the U.S. dollar,” said Amo Sahota, director at Klarity FX in San Francisco. “That’s really what’s impacted dollar-CAD today.”

The U.S. dollar jumped to its highest level in nearly two years, while Wall Street, bond yields and commodity markets had big intraday swings.

The price of oil, one of Canada’s exports, traded above $100 a barrel for the first time since 2014 before settling 0.8% higher at $92.81.

Still, the loonie’s decline was the smallest among G10 currencies as a preliminary estimate showed Canadian factory sales rising 1.3% in January and investors maintained bets on the Bank of Canada hiking interest rates next Wednesday.

It would be the first hike since October, 2018.

“I really would be wondering what the central banks are doing if they decided to not raise interest rates because of what is happening in Ukraine,” Sahota said. “North America has an inflation problem; Canada has an inflation problem and they need to start lifting rates.”

Canada announced more sanctions against Russia, targeting 62 individuals and entities, including members of its elite and major banks, and cancelled all export permits following Russia’s attack on Ukraine.

Canadian government bond yields eased across the curve, with the 10-year yield down 4.8 basis points at 1.926%.

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