Both the Canadian Dollar (CAD) and Australian Dollar (AUD) showed limited movement during Asian trading hours on Tuesday as markets remained focused on US President Donald Trump’s impending deadline regarding the Strait of Hormuz and ongoing Middle East tensions. The USD/CAD pair edged higher to around 1.3930, recovering from modest losses in the previous session, as the US Dollar gained ground amid increased risk aversion linked to uncertainty over a potential peace truce in the Middle East [1]. Similarly, the AUD/USD pair hovered near 0.6920 after modest gains, with traders showing caution ahead of Trump’s deadline [2].
President Trump stated on Monday that the latest proposal for a US ceasefire with Iran was “not good enough,” but acknowledged it as a significant step, adding, “They’re negotiating now, and they’ve made a very significant step. We’ll see what happens” [1]. Trump warned that unless his demands are met by 8 p.m. Eastern Time, he could target Iranian power plants and bridges [2]. Iran, in turn, threatened to retaliate against any US strikes on civilian infrastructure by intensifying attacks on Gulf energy assets, raising concerns about deeper global energy shortages [1].
On the economic data front, the Institute for Supply Management (ISM) reported that the US Services PMI eased to 54.0 in March from 56.1 in February, missing expectations of 55.0 and indicating a slight loss of momentum in the sector [1][2]. In Australia, the S&P Global Services PMI fell sharply to 46.3 in March from 52.8 in February, marking the steepest decline since November 2023, while the Composite PMI dropped to 46.6 from 52.4, signaling the first contraction in private sector business activity in eighteen months [2]. Andrew Harker of S&P Global Market Intelligence attributed the downturn to the impact of the Middle East conflict and rising fuel costs, which drove inflation higher, particularly in the transport and storage sector [2].
Despite a surge in oil prices, with West Texas Intermediate (WTI) trading around $104.30 per barrel, the Canadian Dollar’s upside was limited as risk aversion dominated market sentiment [1]. Canada remains the largest crude oil exporter to the US, and higher oil prices typically support the CAD, but geopolitical risks and uncertainty over the Strait of Hormuz kept the currency under pressure [1].
No explicit forward-looking analyst opinions were provided, but both articles highlighted that traders are closely monitoring developments related to Trump’s deadline and potential escalation in the Middle East, which could have further implications for global energy markets and risk sentiment [1][2].
CONCLUSION
Currency markets remained cautious as traders awaited US President Trump’s deadline on Iran, with both the Canadian and Australian Dollars showing limited movement despite significant economic and geopolitical developments. Rising oil prices and weak PMI data added to the uncertainty, while the risk of escalation in the Middle East kept risk aversion elevated. The market’s next moves will likely depend on the outcome of US-Iran negotiations and any resulting actions.