The Canadian dollar strengthened to 1.39 per US dollar as a pullback in the greenback and renewed hopes for a Middle East ceasefire offset evidence of slowing domestic activity. The loonie recovered after touching its weakest level since December, supported by a decline in the US dollar index following signals that Washington aims to restore vessel traffic and resolve its conflict with Iran within weeks.
President Donald Trump said a ceasefire had been requested but stressed that the United States would only agree once the Strait of Hormuz is secure and fully operational, a stance that helped pull oil prices back from recent highs.
Nonetheless, the Canadian dollar faced pressure from soft domestic data. Canadian manufacturing stagnated in March, with the sector index slipping to 50.0, reflecting higher input costs and concerns over tariffs. As a result, the loonie remains highly sensitive to shifting geopolitical dynamics and to market expectations that the Federal Reserve will keep interest rates unchanged for the remainder of the year.
