The Australian Dollar (AUD) and Canadian Dollar (CAD) both strengthened against the US Dollar (USD) during Asian trading hours on Thursday, driven by a combination of mixed economic data and shifting geopolitical sentiment. The AUD/USD pair held positive ground around 0.7180, supported by Australian labor market data showing the unemployment rate steady at 4.3% in March, matching market expectations. However, the Australian Employment Change figure for March was 17.9K, below the forecast of 20K and down from February's revised 49.7K reading [1]. In China, March retail sales rose 1.7% year-on-year, missing the 2.3% forecast and the previous 2.8%, while industrial production grew 5.7%, slightly above the 5.5% estimate but below February's 6.3%. Chinese GDP increased 1.3% quarter-on-quarter in Q1 2026, up from 1.2% in Q4 2025 [1].
Meanwhile, the CAD benefited from a risk-on market mood that weighed on the USD, with the USD/CAD pair declining for the fourth consecutive day to around 1.3730. Improved sentiment was attributed to expectations of a potential de-escalation in the Middle East conflict. Reports indicated that the US and Iran were considering extending a ceasefire and resuming negotiations for a longer-term peace deal, although tensions remained high, particularly over the Strait of Hormuz, which has been effectively closed for nearly seven weeks [1][2]. US President Donald Trump stated that the war was "close to over," while a Bloomberg report suggested speculation about a possible two-week extension of the ceasefire, though Trump dismissed the necessity of such a move [2].
Easing energy prices also contributed to the USD's weakness, alleviating inflation concerns and reducing expectations for further central bank tightening. The Federal Reserve is widely anticipated to keep interest rates unchanged this month and possibly for the remainder of the year [2]. However, the downside for the CAD may be limited by the impact of lower oil prices, given Canada's status as the largest crude exporter to the US [2].
Both articles highlight that ongoing geopolitical developments in the Middle East, particularly regarding the Strait of Hormuz and ceasefire negotiations, are influencing currency markets. While the AUD found support from steady unemployment and positive Chinese industrial data, the CAD's gains were tied to improved risk sentiment and lower energy prices, despite potential headwinds from the latter [1][2].
CONCLUSION
The AUD and CAD both advanced against the USD amid mixed economic data and optimism over a potential Middle East ceasefire. While the AUD was buoyed by steady unemployment and Chinese growth, the CAD benefited from risk-on sentiment and easing energy prices. Market participants remain attentive to geopolitical developments and central bank policy expectations.