The Canadian dollar rose slightly against its US counterpart on Monday, as recent pessimism over the outlook for the Middle East war eased, allowing it to recover part of its losses after hitting a two-month low earlier in the session.

The Canadian currency, known as the “loonie,” was trading up 0.1% at 1.3715 per US dollar, or 72.91 US cents, after touching an intraday low of 1.3754, the weakest level since January 23.

Erik Bregar, Director of FX and Precious Metals Risk Management at Silver Gold Bull, said: “Markets have seen significant swings in broader risk sentiment. The Canadian dollar is behaving somewhat more steadily… and is not showing the same level of volatility we see in metals, equities, or bonds.”

The US dollar, considered a safe-haven asset, weakened against a basket of major currencies, while equities rose after US President Donald Trump announced he would delay strikes on Iranian energy infrastructure following talks described as “productive” between the two sides.

Oil prices — one of Canada’s key exports — also declined by 10.3% to $88.13 per barrel, easing some concerns that rising inflation could lead to tighter global monetary policy.

Money markets are currently pricing at least two interest rate hikes by the Bank of Canada this year, after expectations had previously leaned toward keeping policy unchanged before the outbreak of the conflict.

Bregar said: “The short end of the yield curve is overreacting. I don’t think any central bank will respond hastily to price increases lasting only one or two months.”

Data from the US Commodity Futures Trading Commission (CFTC) showed that speculators reduced their bullish bets on the Canadian dollar, with net non-commercial long positions falling to 886 contracts as of March 17, compared with 36,159 contracts in the previous week.

Canadian government bond yields declined across the curve, with the two-year yield falling by 14 basis points to 2.927%, after having reached its highest level since November 2024 at 3.212%.

While most people see the importance of preventing Iran from developing nuclear weapons, many may now view US President Donald Trump’s plan to achieve that as resembling the famous “South Park gnomes” plan for profiting from stealing underwear, which went as follows: “Phase one: collect underwear, phase two: ?, phase three: profit.” Trump’s version, it seems, was: “Phase one: kill the Supreme Leader, phase two: ?, phase three: Iran will never develop nuclear weapons.”

Puzzlingly, not only to participants in energy markets, Trump appears to have ignored Iran’s long-standing threat that if it were subjected to a severe external attack, it could — and would — close the Strait of Hormuz, through which as much as one-third of the world’s oil and about one-fifth of liquefied natural gas passes. The stated objective of that would be to drive oil and gas prices sharply higher, causing major economic damage to the largest energy importers. That plan, unlike the South Park gnomes’ plan or Trump’s plan, appears to be working very well.

Who is really benefiting from this ongoing conflict in Iran?

“Putin is laughing now,” a senior source in Washington working closely with the current US administration told OilPrice.com last week. “Just when he thought the game was over in Ukraine, it has become like Christmas all over again in the Kremlin.”

To begin with, with the United States lifting sanctions on Russian oil, industry estimates indicate that Russia is earning as much as $150 million in additional weekly revenue from those exports. India moved fastest, buying as many as 30 million barrels almost immediately, roughly equivalent to all Russian cargoes available in Asian waters.

What is striking here is that Washington spent the entirety of Trump’s second term working through every possible channel to prevent India from continuing to import Russian oil, on the grounds that it constituted a key source of funding for the Kremlin’s war in Ukraine. Last week, the United States’ long-standing core ally in the Asia-Pacific region — Japan — also emphasized how important access to Russian oil is amid the growing chaos in the Middle East.

Japan’s Minister of Economy, Trade and Industry, Ryosei Akazawa, said: “Securing crude oil from overseas, including Russian oil, is vital to our country’s energy security.” Like many countries, Japan has become increasingly dependent on Middle Eastern oil since Russia’s invasion of Ukraine in 2022, to the point that the region accounted for 94% of its oil imports last year, with 93% of those volumes passing through the Strait of Hormuz.

Although the exemptions for Russian oil have now been extended to all countries, they remain valid for only 30 days and are limited to oil already at sea. Nevertheless, with energy prices continuing to rise, the chances of extending that period and broadening the range of covered supplies appear to be increasing. The same may also apply to the new — and perhaps more surprising — exemptions related to Iranian oil already at sea.

It is not only about money for Russia

Russia is also benefiting from the large volume of weapons and ammunition being used by the United States in Iran, which will affect the quantity and range of weapons that Europe can later purchase and transfer to Ukraine to support it in its war against Russia.

According to the Washington source, citing figures from the US Department of Defense, the cost of the war for the United States exceeded $11 billion in the first week alone from February 28. As of now, according to the same sources, the cost of weapons and ammunition alone — excluding other expenses such as medical costs or the replacement of lost military aircraft — has exceeded $18 billion.

More important for Ukraine and Europe — which are preparing for the possibility of a greater Russian advance westward if Moscow takes control of Ukraine — is the type of weapons being used, as they will not be available for purchase through the US Foreign Military Sales program, under which Europe pays the US government, which in turn buys the weapons from US defense companies and then transfers them to Ukraine.

According to the Washington source and a senior source within the European Union security apparatus, the scale and type of US weapons being used in Iran are “staggering.” This includes Tomahawk cruise missiles, each costing about $3.6 million and taking a long time to replace, something senior US Navy planners said “will be felt for years.”

Large numbers of Patriot interceptor missiles have also been used to counter Iranian ballistic missiles, even though each missile costs millions of dollars and they are already in critically short supply for Ukraine. THAAD system missiles have also been used extensively, with each one costing between $11 million and $24 million, alongside the destruction of several associated radar systems in Iranian strikes in the Gulf.

Hundreds of precision-guided air munitions have also been used, such as JDAM bombs and JASSM missiles, precisely the categories that Ukraine has been urgently requesting. All of this represents not only a financial drain, but also a major depletion of the military systems that Europe depends on purchasing and transferring to Ukraine.

An escalation that could worsen further

So far, these pressures on the United States and its allies do not appear likely to ease anytime soon — and may intensify further. Iran-backed Houthis have not yet been asked to fully shut down the Bab el-Mandeb Strait, a vital route through which between 10% and 15% of global seaborne oil shipments pass.

This waterway, 16 miles wide, lies between the western coast of Yemen on one side and the eastern coasts of Djibouti and then Eritrea on the other, before connecting to the Red Sea, which also includes Saudi Arabia’s Yanbu oil port.

Saudi Arabia has used this route to bypass the Strait of Hormuz and reduce the impact of any Iranian blockade, increasing exports through the East-West pipeline to Yanbu from an average of 1.7 million barrels per day in 2025 to a record 5.9 million barrels per day in March, with plans to raise that to 7 million barrels per day soon.

With this escalation, and other options available to Iran, oil and gas prices could rise to levels far above current emergency scenarios, as a detailed analysis by OilPrice.com indicated.

Copper prices rose during Monday’s trading, supported by a weaker US dollar against most major currencies, in addition to a decline in inventories of the industrial metal in China.

Copper inventories in China recorded their largest weekly drop this year, while prices had fallen sharply due to the Iran-related war, prompting stronger demand from manufacturers, according to a Bloomberg report on Monday.

Refined copper inventories across China declined by 78,700 tons in the week ending Monday, bringing total stockpiles to 486,200 tons, based on data from Mysteel Global cited by Bloomberg.

The firm said manufacturers increased their purchases after a rise in new orders, which boosted consumption.

Copper prices have declined about 12% this month on the London Metal Exchange, amid concerns that the conflict in the Middle East could drive inflation higher and slow global growth.

Demand also received additional support from restocking activity following the Lunar New Year holiday in late February, according to the report.

Yan Yuhao, a senior analyst at Zhejiang Hailiang, said the company had tripled its daily purchases of refined copper compared to last year’s average after domestic prices fell below 100,000 yuan per ton.

He added that many copper rod producers have full orders through next month and are considering operating above designed capacity.

Treatment charges for copper rods also increased last week, driven by stronger demand, according to Mysteel data.

In a related context, Ivanhoe Mines CEO Robert Friedland warned in remarks to the Financial Times that copper production in Africa could face significant disruptions if the Iran conflict continues for more than three weeks, due to the continent’s heavy reliance on sulfur supplies from the Middle East.

On the other hand, the dollar index fell by 0.7% to 98.9 points as of 15:04 GMT, after hitting a high of 100.1 points and a low of 98.8 points.

In US trading, copper futures for May delivery rose 2.4% to $5.50 per pound as of 14:57 GMT.

Bitcoin rose on Monday, recovering from losses recorded during Asian trading after US President Donald Trump announced that Washington would delay planned attacks on Iranian energy facilities.

The world’s largest cryptocurrency climbed 4.1% to $71,060 as of 07:34 AM Eastern Time (11:34 GMT), after falling earlier in the session to $67,363.

However, Iran’s Fars News Agency cited a source saying there were no direct or indirect contacts with the United States, noting that Washington’s decision to delay the strikes came after an Iranian warning to target energy infrastructure in West Asia in response to any attack.

Delaying strikes boosts risk appetite

Cryptocurrency prices rose after Trump signaled a possible de-escalation in military plans, stating in a post on Truth Social that both sides had held “very good and productive talks” aimed at reaching a “comprehensive and final resolution” to tensions in the Middle East.

He added that attacks on Iranian infrastructure would be postponed for five days.

However, Fars denied any communication with Washington, confirming that the decision to delay came after Iran threatened to retaliate against any targeting of energy facilities in the region.

Before Trump’s remarks, Bitcoin had been trading lower amid a broad decline in risk assets such as equities and currencies, as well as gold.

Trump had given Iran a 48-hour deadline to reopen the Strait of Hormuz to shipping, threatening to strike critical energy facilities if it failed to comply, while Tehran responded by threatening to close the strait entirely and target energy and water facilities in Gulf countries.

Bitcoin outperforms gold

Bitcoin has shown relatively stronger performance compared to gold and other precious metals over the past month despite geopolitical tensions.

Bitcoin rose about 9% during the month, while spot gold declined around 12% as of Monday.

Gold came under selling pressure following a wave of profit-taking after reaching record levels in late January, while position unwinding also weighed on prices.

Despite the outbreak of war with Iran, gold did not see strong safe-haven demand, as concerns over rising inflation and interest rates outweighed its appeal.

In contrast, Bitcoin benefited from some positive regulatory developments in the United States in recent weeks, in addition to renewed interest from investors seeking lower-priced opportunities after its previous sharp decline.

Altcoins recover

Alongside Bitcoin’s gains, other cryptocurrencies also recovered, with Ethereum rising 4.5% to $2,172.92, while Ripple gained 2.8% to $1.42.