Tensions between the United States and Iran have escalated, with Iran announcing the closure of the Strait of Hormuz to commercial vessels and threatening to target any approaching ships, citing a breach of ceasefire due to the US naval blockade of Iranian ports [1][2]. This move has fueled global supply concerns and led to a rally in crude oil prices, which has provided some support to commodity-linked currencies such as the Canadian Dollar (CAD) [1]. However, the Canadian Dollar retreated from a more than one-month high against the US Dollar (USD), with the USD/CAD pair rebounding above the 1.3700 mark during the Asian session, snapping a five-day losing streak [1]. The USD was the strongest against the Australian Dollar, gaining 0.24% against the CAD on the day [1].
The heightened geopolitical risk has also supported the US Dollar as a safe-haven asset, contributing to pressure on other currencies, including the New Zealand Dollar (NZD) [1][2]. The NZD/USD pair pared its daily losses and traded around 0.5880 during the Asian session, following the release of New Zealand’s trade balance data [2]. New Zealand posted a trade surplus of NZD 698 million month-over-month in March, reversing a deficit of NZD 365 million in February, while exports rose 7.3% year-on-year to a record NZD 7.94 billion and imports increased 9.6% to NZD 7.25 billion [2]. Despite this positive trade data, the NZD remained under pressure due to the stronger USD amid safe-haven flows [2].
In China, the People’s Bank of China (PBoC) left its Loan Prime Rates unchanged at 3.00% for the one-year and 3.50% for the five-year terms, a decision that was noted but did not significantly impact the currency markets in the context of the broader geopolitical developments [2].
US President Trump confirmed that US representatives would travel to Islamabad for negotiations with Iran, but also criticized Tehran’s decision to re-close the Strait of Hormuz and reiterated threats to target Iranian infrastructure [2]. According to [1], Iran’s actions were in response to the US naval blockade and the perceived breach of ceasefire, while [2] adds that Iranian state media cited “unrealistic expectations” as a reason for refusing to resume talks. There is a discrepancy in the reporting of the timeline and details of the Strait’s closure: [1] states Iran announced the closure again, while [2] reports that authorities briefly signaled a reopening on Friday but reversed the decision on Saturday after President Trump declined to lift the blockade.
CONCLUSION
The escalation of US-Iran tensions and the closure of the Strait of Hormuz have driven safe-haven demand for the US Dollar and boosted oil prices, impacting major currency pairs such as USD/CAD and NZD/USD. While positive trade data supported the New Zealand Dollar, geopolitical risks and a stronger USD limited gains for both the NZD and CAD. The market remains sensitive to further developments in US-Iran relations and potential disruptions to global oil supply.