The Canadian dollar declined for the third consecutive day against its U.S. counterpart on Thursday as investors assessed ongoing trade restrictions in the Strait of Hormuz and data showing that rising oil prices pushed domestic producer prices higher last month.

The Canadian currency, known as the "loonie," was trading down 0.1% at 1.3680 CAD per U.S. dollar (equivalent to 73.10 U.S. cents), after moving within a range between 1.3661 and 1.3689.

Impact of Dollar Strength and Geopolitical Risks

Strategists at Scotiabank, Shaun Osborne and Eric Theoret, noted that domestic news and developments remain limited, pointing out that the Canadian dollar's intraday movements are primarily driven by the general trend of the U.S. dollar and overall market risk levels.

They added: "We expect limited gains for the U.S. dollar, with strong resistance in the 1.37 range, while support remains at 1.3625 before a potential decline toward 1.35 levels."

Meanwhile, the U.S. dollar index rose slightly against a basket of major currencies, supported by escalating tensions between the U.S. and Iran and stalled peace talks. This combination pushed oil prices higher and dampened investor risk appetite.

Oil Supports the Canadian Economy... With Inflationary Pressure

Prices for oil—one of Canada's most vital exports—rose by 1.5% to reach $94.37 per barrel.

Data revealed that producer prices in Canada increased by 2.4% in March compared to February, driven by higher costs for energy, petroleum products, and chemicals following the closure of the Strait.

Additionally, increased sales in the petroleum products, coal, and transportation equipment sectors contributed to a 3.5% month-on-month rise in manufacturing sales during March, according to preliminary estimates.

Anticipation of Bank of Canada Decisions

Retail sales data for February, scheduled for release on Friday, is expected to provide further insight into domestic economic performance ahead of the Bank of Canada’s monetary policy decision next week.

Investors are betting that the central bank will keep its key interest rate unchanged at 2.25%, with the possibility of a single rate hike before the end of the year.

Bond Movements

Canadian government bond yields declined across various maturities. The 10-year bond yield fell by 3.8 basis points to reach 3.454%, reflecting a flatter yield curve.

Major U.S. stock indices edged lower on Thursday as investors awaited clearer signals regarding the U.S.-Iran conflict, while mixed corporate earnings reignited concerns over AI's impact on the software sector.

Tehran tightened its grip on the Strait of Hormuz, broadcasting footage of special forces storming a large cargo ship seized on Wednesday. Iran continues to demand that the United States lift the naval blockade imposed on its ports.

While investors have shown remarkable resilience recently, largely ignoring war risks, signs of fatigue are emerging. This has led to brief periods of risk aversion as the market seeks clarity on the conflict's resolution and timing. With oil prices holding above $100 per barrel, the risk of a resurgence in inflation remains a key concern.

Market Performance at 09:46 AM ET

- Dow Jones Industrial Average: Fell 154 points (0.30%) to 49,341.55.

- S&P 500: Decreased 6.61 points (0.10%) to 7,131.08.

- Nasdaq Composite: Dropped 57.27 points (0.26%) to 24,593.45.

Data released Thursday showed a slight increase in weekly jobless claims, though the threat of war-driven price hikes continues to hang over the economy.

Earnings Under the Microscope

Despite a largely strong earnings season so far, investors are questioning the reliability of these results as a future indicator, given they only reflect one month of Middle East disruptions.

Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management, noted: "Earnings results do not yet reflect the impact of the energy supply shock." He added that while an oil shock is a drag on growth, there is strong structural support, and the market remains comfortable as long as a path to de-escalation exists.

Pressure on Technology Stocks

- IBM: Shares tumbled 12% after Q1 revenue growth slowed due to weakness in its software business, sparking fears that AI tools are disrupting traditional software business models.

- Microsoft & Adobe: Shares fell 2.6% and 7.3%, respectively.

- S&P 500 IT Sector: Declined 0.6%, acting as the primary drag on the index, though a 1.8% gain in the Utilities sector helped limit broader losses.

Notable Stock Movements

- Tesla: Dropped 3.8% after increasing its 2026 spending plans to over $25 billion, as Elon Musk pivots heavily toward AI, robotics, and chips.

- Lockheed Martin: Slipped 3.7% following lower-than-expected Q1 profits.

- Texas Instruments: Jumped 10.5% after forecasting Q2 revenue and profit that beat Wall Street estimates.

- Cannabis Stocks: Tilray Brands and Canopy Growth rose 5.8% and 6.5%, respectively, after the U.S. Department of Justice reclassified state-licensed marijuana as a less dangerous drug.

In terms of market breadth, advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE and a 1.51-to-1 ratio on the Nasdaq. The S&P 500 recorded 28 new 52-week highs and 5 new lows, while the Nasdaq saw 74 new highs and 41 new lows.

Bitcoin stabilized above the $78,000 level on Thursday as investors balanced ongoing geopolitical tensions in the Strait of Hormuz with the extension of the ceasefire between the United States and Iran.

The world's largest cryptocurrency was trading slightly up by 0.2% at $78,166.2 by 02:46 AM ET (06:46 GMT). Prices had previously surpassed the $79,000 mark on Wednesday, marking their highest levels since early February.

Ongoing Washington-Tehran tensions support oil

President Donald Trump extended the ceasefire with Iran on Tuesday, retreating from plans for new military strikes. However, uncertainty persists as Tehran has not officially agreed to the extension and has criticized the continued U.S. naval blockade of its trade routes.

The Iranian Revolutionary Guard seized two container ships in the Strait of Hormuz on Wednesday, tightening its grip on the vital energy corridor. Additionally, Iranian forces opened fire on three vessels in the area. This sustained tension kept global energy markets on edge, with oil prices stabilizing above $100 per barrel. Conversely, Asian equity markets and Wall Street futures declined on Thursday morning.

Institutional support boosts cryptocurrencies

Despite pressure on high-risk assets, cryptocurrencies received relative support driven by a return of institutional demand. MicroStrategy (NASDAQ: MSTR) continued its crypto-buying policy, announcing a new multi-billion dollar deal this week.

GSR launches first multi-asset ETF

GSR announced on Wednesday the launch of its first exchange-traded fund (ETF) named the Crypto Core3 ETF (BESO), marking its entry into the asset management field.

- The U.S.-listed fund offers actively managed exposure to Bitcoin, Ethereum, and Solana.

- It includes the potential for additional returns through staking mechanisms.

- The company explained that the fund will be rebalanced weekly based on research signals, with a 1% management fee, targeting the growing demand for diversified investment products in the digital currency market.

Altcoins decline as oil rises

In contrast, most altcoins declined on Thursday as rising oil prices weighed on market risk appetite.

- Ethereum, the second-largest cryptocurrency, fell 1.7% to $2,350.41.

- Ripple, the third-largest, dropped 2.3% to $1.42.

Oil prices stabilized on Thursday, holding onto gains from the previous session as peace talks between the United States and Iran stalled and trade restrictions through the Strait of Hormuz persisted.

Brent crude contracts for next month delivery edged down slightly by 19 cents, or 0.2%, to $101.72 per barrel by 12:17 GMT, after closing above the $100 mark on Wednesday for the first time in over two weeks. U.S. West Texas Intermediate (WTI) contracts also fell by 19 cents, or 0.2%, to $92.77 per barrel.

Both benchmarks had surged by more than $3 on Wednesday, driven by a larger-than-expected decline in U.S. gasoline and distillate inventories, coupled with a lack of progress in peace negotiations.

Bjarne Schieldrop, an analyst at SEB bank, noted: "The market may be on the verge of shifting from expecting an imminent deal to realizing it may take much longer. If expectations for the reopening of the Strait in early May collapse, prices are likely to re-price upward for both crude and products."

While President Donald Trump extended the ceasefire following a request from Pakistani mediators, both Iran and the U.S. continue to impose restrictions on vessel passage through the Strait. Prior to the war’s outbreak on February 28, the waterway handled approximately 20% of daily global oil supplies.

Tensions escalated after Iran seized two vessels in the waterway on Wednesday, tightening its grip on the strategic passage. In response, Trump maintains a U.S. naval blockade on Iranian trade, while Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf asserted that a full ceasefire is illogical unless the blockade is lifted.

Despite these restrictions, data from Vortexa showed that approximately 10.7 million barrels of Iranian crude oil exports crossed the Strait of Hormuz and left the U.S. blockade zone between April 13 and April 21.

Additionally, maritime and security sources reported that the U.S. military intercepted at least three Iranian-flagged oil tankers in Asian waters, redirecting them away from locations near India, Malaysia, and Sri Lanka.

White House spokesperson Karoline Leavitt stated that Trump has not set a definitive deadline for the extended ceasefire.

U.S. Energy Exports Hit Record High

In energy trade developments, U.S. exports of crude oil and petroleum products rose by 137,000 barrels per day (bpd) to a record high of 12.88 million bpd. Asian and European nations have increasingly turned to American supplies following disruptions caused by the war with Iran.

The U.S. Energy Information Administration (EIA) reported on Wednesday that while crude inventories rose, stocks of gasoline and distillates declined.

- Crude inventories increased by 1.9 million barrels, contrary to a Reuters poll predicting a 1.2 million-barrel drop.

- Gasoline stocks fell by 4.6 million barrels, exceeding the expected 1.5 million-barrel decline.

- Distillate stocks dropped by 3.4 million barrels, compared to a forecasted 2.5 million-barrel decrease.