The Canadian dollar rose sharply against its US counterpart on Thursday, recovering from a six-week low as optimism grew over the possibility of reaching an agreement to extend the ceasefire in the Middle East, boosting investor risk appetite.

The Canadian dollar, known as the “loonie,” climbed 0.4% to C$1.3780 against the US dollar, equivalent to 72.57 US cents, heading for its biggest daily gain since April 30.

Earlier in the session, the Canadian currency had touched its weakest level since April 13 at C$1.3869 per US dollar.

The moves came after reports said the United States and Iran had reached an agreement to extend the ceasefire, pending approval from US President Donald Trump, following Iran’s targeting of a US base in Kuwait in response to American strikes against what Washington described as Iranian drone operations.

Erik Bregar, director of FX and precious metals risk management at Silver Gold Bull, said markets had returned to believing a deal was possible, adding: “There’s risk appetite everywhere, including in the Canadian dollar.”

US stocks rose, while the US dollar weakened against a basket of major currencies.

US West Texas Intermediate crude prices also rose 0.4% to $89.06 per barrel, supporting the Canadian dollar since oil is one of Canada’s key exports.

In economic data, figures showed Canada’s current account deficit widened to C$7.18 billion in the first quarter, compared with a revised deficit of C$1 billion in the fourth quarter of last year.

Economists expect first-quarter GDP data, due Friday, to show the Canadian economy expanded at an annualized rate of 1.5%.

In a separate development, formal negotiations began between the United States and Mexico to rewrite the United States-Mexico-Canada trade agreement, amid US demands to tighten regional rules of origin, while Canada was excluded from the current round of talks.

Canadian Prime Minister Mark Carney called for a “new partnership” with the United States “to help make America great again” during a speech in New York.

In bond markets, Canadian government bond yields declined across maturities, with the 10-year yield falling 2.1 basis points to 3.444% after earlier touching its highest level in around a week at 3.499%.

Oil prices turned lower on Thursday, giving up earlier gains, after reports said negotiators from the United States and Iran had reached a preliminary agreement to extend the ceasefire and begin talks on Iran’s nuclear program.

Brent crude, the global benchmark, fell by 58 cents to close at $93.71 per barrel, while US West Texas Intermediate crude edged up by 22 cents to $88.90 per barrel.

According to US sources speaking to CNBC, negotiators reached a 60-day memorandum of understanding aimed at extending the truce and opening negotiations over Iran’s nuclear file, although US President Donald Trump has not yet given final approval.

Prices had risen earlier in the session following an exchange of military strikes between the United States and Iran, after Iran’s Revolutionary Guard announced it had targeted a US base early Thursday without disclosing its location.

Meanwhile, US Central Command said Iran launched ballistic missiles toward Kuwait, which were successfully intercepted.

Those developments came after US forces carried out new strikes inside Iran targeting a military site that Washington said posed a threat to American forces and commercial shipping through the Strait of Hormuz, while several Iranian drones were also intercepted and shot down.

Oil prices have fallen more than 10% since May 18, when Trump announced he had halted an imminent military strike against Iran to allow more time for negotiations.

US Secretary of State Marco Rubio said on Wednesday that talks with Iran had made some progress, stressing that Trump prefers a diplomatic solution and would give negotiations “every possible chance to succeed.”

Since a fragile truce was reached in April, Washington and Tehran have remained deadlocked over the future of navigation through the Strait of Hormuz.

Iranian state television reported on Wednesday that Tehran had agreed, under a draft memorandum of understanding with the United States, to restore commercial shipping traffic through the Strait of Hormuz to pre-war levels, with joint management of the waterway between Iran and the Sultanate of Oman. However, the White House described those reports as “completely fabricated.”

Trump later stressed that “no country will control navigation through the strait.”

In the same context, Amos Hochstein, former energy adviser in the administration of former US President Joe Biden, said Middle Eastern leaders now believe Iran already exercises de facto control over the Strait of Hormuz regardless of any formal agreement.

He added: “No matter what happens, the Iranians will control the Strait of Hormuz for the foreseeable future.”

Citigroup said in a research note that oil markets have begun stabilizing as fears of a complete supply disruption scenario ease amid signs that Washington and Tehran may be moving closer toward a possible agreement.

However, the bank also warned that persistently higher oil prices could increase global inflationary pressures, potentially pushing central banks toward more hawkish monetary policies to combat inflation driven by rising energy prices.

Two weeks ago, US President Donald Trump visited the Chinese capital Beijing for a high-level summit with Chinese President Xi Jinping aimed at easing trade tensions between the two countries, securing new business deals, and leveraging Chinese diplomatic influence to help manage the conflict with Iran.

Trump was accompanied by a delegation of top US chief executives in an effort to push China to open its markets to American technology companies, and he succeeded in securing several multi-billion-dollar agreements.

The summit resulted in a limited tactical easing and a relative improvement in diplomatic relations between the two rival powers, with the White House stating that Xi Jinping still opposes the militarization of the Strait of Hormuz.

However, Trump’s visit saw a clear failure, as the talks in Beijing did not produce a formal agreement or long-term trade truce regarding China easing restrictions on rare earth exports.

According to an opinion article published this week by the US military newspaper Stars and Stripes, China “can paralyze the US drone fleet with a single phone call.”

Last November, Beijing confirmed that the broad restrictions it had previously imposed on rare earth exports remain in place, including a complete ban on rare earth extraction and separation technologies, in addition to quantitative restrictions on certain critical minerals such as tungsten, bismuth, and antimony, as well as medium and heavy rare earth elements.

China had temporarily suspended a second wave of restrictions that required export licenses for foreign entities and products containing small amounts of Chinese rare earth materials in October 2025, but only for one year.

An analysis by BMI Research, a Fitch Group unit, showed that Xi Jinping’s team merely promised to address US supply shortage concerns without offering structural extensions or concrete policy adjustments during the latest meeting.

Heavy rare earth exports remain restricted

Despite the temporary easing period, China’s exports of critical heavy rare earths remain sharply lower, with dysprosium exports currently standing at only 41% of pre-restriction levels, while terbium exports are at 49% and yttrium exports at 42%.

Yttrium prices have surged around fifteenfold due to the severe shortage caused by Chinese restrictions, creating widespread disruptions in US aerospace and semiconductor industries, where the mineral is used as a critical thermal protection and insulation layer.

China supplies around 70% of US yttrium needs, in addition to 100% of its terbium, holmium, and lutetium requirements.

Washington races to build domestic alternatives

China’s near-monopoly influence over the rare earth sector has pushed the United States and its Western allies to urgently search for alternative sources.

Last July, the US Department of Defense agreed to purchase $400 million in preferred shares of MP Materials, making the Pentagon the company’s largest shareholder with a stake of around 15%.

The agreement includes a ten-year purchase contract with guaranteed minimum pricing, ensuring the company’s production is directed toward defense and commercial customers within the United States in order to strengthen the independence of domestic supply chains.

The company is using this funding, along with $1 billion in commercial debt financing provided by JPMorgan Chase and Goldman Sachs, to build a massive rare earth magnet manufacturing complex in Texas.

During the same period, USA Rare Earth signed a non-binding letter of intent with the US Department of Commerce to obtain $1.6 billion in government funding under the CHIPS and Science Act program.

The funding package includes a guaranteed loan worth $1.3 billion in addition to $277 million in federal funding, in exchange for the US government receiving a 10% equity stake along with additional options to purchase future shares.

The investment aims to accelerate mining, processing, and refining operations for heavy rare earth elements at the Round Top project in Texas, with commercial production expected to begin by 2028.

ReElement Technologies is also seeking to strengthen its position within the emerging Western rare earth supply chain through agreements related to heavy mineral processing and alloy production in North America.

The company signed long-term supply agreements with Canada’s Saskatchewan Research Council to provide neodymium-praseodymium, dysprosium, and terbium, in addition to developing metal and alloy production facilities for defense applications in Ohio.

It also signed agreements to source raw materials from projects in Greenland and the US state of Montana as part of an integrated strategy targeting US defense and industrial markets.

Europe moves to reduce dependence on China

In Europe, the European Union is seeking to overcome Chinese dominance over rare earths through the Critical Raw Materials Act, which places limits on dependence on any single country within supply chains.

The EU is investing heavily in extraction, processing, and recycling operations within Europe, while also launching a list of strategic projects and signing partnerships with resource-rich Western allied nations.

The European Commission is also implementing coordinated defense strategies through initiatives such as the “Resource EU Plan,” backed by funding of up to €3 billion, aimed at coordinating demand, conducting supply chain stress tests, and carrying out joint purchases of critical minerals among member states.

European law also requires that at least 25% of the EU’s strategic raw materials come from recycling by 2030.

At the same time, European automotive and technology companies are developing products that do not rely on rare earth materials, including a shift toward motors that do not use permanent neodymium-based magnets, such as induction motors and synchronous reluctance motors, particularly in electric vehicles.

Bitcoin fell below the $73,000 level on Thursday after renewed clashes between the United States and Iran weakened risk appetite and pushed traders toward defensive positioning.

The cryptocurrency dropped to around $72,500 before recovering slightly to trade near $73,303 at the time of writing, down 3.54% over the past 24 hours.

The decline came after military operations escalated between Washington and Tehran, threatening the fragile truce and weakening market hopes for a near-term peace agreement.

Iran’s Revolutionary Guard said it had targeted a US air base after the United States carried out strikes against Iranian drones and a launch platform near the Strait of Hormuz.

Sharp deterioration in crypto market sentiment

The decline also coincided with a clear deterioration in cryptocurrency market sentiment, as the Crypto Fear & Greed Index fell to 22, returning to the “extreme fear” zone.

Market data showed that more than 166,000 traders were liquidated over the past 24 hours, with total liquidations reaching around $932 million.

Hormuz tensions pressure high-risk assets

The conflict linked to the Strait of Hormuz remains a major concern for markets given its importance as one of the world’s key oil shipping routes.

Oil prices rose again following the latest strikes, recovering part of their previous losses tied to reports of progress in peace talks.

Brent crude climbed around 2.5% to $96.63 per barrel, while US West Texas Intermediate crude rose to around $90.93.

The rise reflects continued market pricing of risks related to disruptions in energy flows, even as prices remain below the highs recorded earlier in the conflict.

The White House also rejected Iranian media reports about a draft understanding that would involve lifting the US naval blockade in exchange for Iran restoring commercial shipping traffic through the Strait of Hormuz within one month, describing those reports as “incorrect.”

US President Donald Trump confirmed that he would not rush into an agreement, warning that Iranian attempts to prolong negotiations would not change his position.

Bitcoin loses a key support level

From a technical perspective, Bitcoin’s structure deteriorated after losing support at the $74,000 level, which has now turned into short-term resistance.

Traders are watching whether the cryptocurrency can reclaim that level to ease selling pressure.

Crypto analyst Ted said Bitcoin failed to hold above the $81,453 level before falling below $78,921 and then breaking beneath the $75,000 barrier, reflecting short-term seller dominance after the recovery attempt failed.

The first support level is currently located between $73,300 and $73,400, the range where Bitcoin is currently trading.

If buyers fail to defend that area, the next major support lies near $70,671.

A break below that level could open the way toward the demand zone between $66,318 and $65,816.

Key resistance levels

On the upside, Bitcoin needs to move back above the $75,000 level before any stronger recovery can begin.

After that, resistance appears near $78,921 and then $81,453.

Analysts believe a daily close above $81,453 could improve the short-term technical outlook and reopen the path toward the $84,000-$85,000 range.

Higher resistance levels are located near $90,235 and then $97,899, although they are not currently viewed as active targets unless Bitcoin first regains the nearer resistance zones.

Slowing network activity raises concerns

On-chain data also showed declining Bitcoin network activity, with the number of active addresses falling 39.8% over two weeks, from 821,000 addresses to just 494,000, according to data published by analyst Ali Martinez.

Declining activity during periods of price consolidation often points to weaker participation from short-term traders.

At the same time, Binance data showed spot buying volumes have been declining for months, meaning fewer traders are aggressively purchasing Bitcoin at market prices, reflecting weak spot demand during the recent recovery attempt.

Forced liquidation risks remain elevated

Funding rates on Binance have returned to positive territory, signaling that derivatives traders still lean toward long positions despite weak price momentum.

When leveraged long positioning rises alongside weak spot demand, the market becomes more vulnerable to forced liquidations.

That was clearly visible in recent trading, as the cryptocurrency market saw nearly $1 billion in liquidations over 24 hours.

Traders believe that if Bitcoin fails to reclaim the $75,000 level, attention will remain focused on the $71,000-$73,000 zone as the key area for potential rebounds.