FX.co ★ Canadian Dollar Rebounds Amid USD Weakness

The Canadian dollar strengthened toward 1.39 per US dollar as the greenback weakened following reports of a Pakistan-brokered, 45-day ceasefire framework between Washington and Tehran. The loonie is drawing support from receding fears of a severe, energy-driven inflation shock after Iranian officials signaled a shift toward a tanker toll regime in the Persian Gulf, rather than pursuing a full blockade. This change has eased the immediate pressure on the Bank of Canada to maintain an aggressively restrictive monetary stance to counter potential second-round inflation effects, helping stabilize the domestic outlook even as March manufacturing data posted a fifth consecutive month of contraction at 47.6.

Although the US economy added a stronger-than-expected 178,000 jobs in March, the move out of safe-haven US dollar positions on hopes of de-escalation is, for now, outweighing the yield advantage of the greenback. Markets remain highly sensitive to President Trump’s impending Tuesday deadline for potential infrastructure strikes.