The Canadian dollar weakened to its lowest level in nearly four weeks compared to its U.S. counterpart on Wednesday, while Global equity markets have added to their recent declines and investors are awaiting an interest rate decision from the Bank of Canada.

The BoC is expected to announce its first half-point interest rate hike in more than 20 years, as the central bank accelerates its tightening schedule to make in the face of an overheating economy, according to analysts.

The Bank could also announce the start of a quantitative tightening, allowing the significant share of government bonds it has amassed during the pandemic to decrease as they expire.

The reduction in its share of the bond market could transmit monetary policy more effectively to the economy, as borrowing costs tend to to be determined by longer-term rates rather than the very short-term rate set by the BoC.

The Canadian dollar was trading 0.2% lower at 1.2670 for the greenback, or 78.93 cents U.S., after touching its lowest intraday level since March 17 to 1.2674.

The loonie's decline occurred as the safe-haven US dollar rose against a basket of major currencies, while global stocks fell for a on the fourth day, with investors weighing the inflation outlook.

Supply concerns in the context of Russia's invasion of Ukraine helped drive up the price of oil, one of the main exports from Canada. The price of U.S. crude was up 1.5% to $102.14 a barrel.

Cancan government bond yields fell across the curve, following the movement of U.S. Treasuries. The 10-year yield fell 1.7 basis points to 2.629%, after hitting its highest intraday level in more than eight years at 2.735% on Tuesday.