Shipping Disruptions in Strait of Hormuz as US–Iran Clashes Escalate, Driving Oil Prices Higher

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3490-1.3740

Euro                1.5790-1.6040

Sterling           1.8300-1.8550

WTI Oil (opening level) $103.99

The CAD/USD is opening at 1.3611 ( 0.7347 )

Trump’s plan to escort vessels trapped in the Strait of Hormuz has failed to improve the situation.

US sources say that two American-flagged cargo ships have crossed the waterway, but some other ships have reported explosions or fires, and Iran has attacked an Oil port in the UAE (which hosts a large US Army base).

The rising tensions are buoying Oil prices. Crude Oil is Canada’s main export, and these prices are providing support to the CAD.

On the macroeconomic front, the US ISM Services Purchasing Managers Index for April and the US JOLTS Job Openings report from March will be the main events on Tuesday. The highlight of the week, however, will be on Friday with the US Nonfarm Payrolls report and Canada’s Employment figures for April coming out simultaneously.

Headlines

• US and Iran exchanged fire in the Strait of Hormuz, undermining a four-week ceasefire. US forces said they repelled Iranian attacks while escorting two US-flagged ships, and the UAE reported intercepting missiles and a fire at its Fujairah oil terminal. Despite US plans to restore shipping, security risks may keep the route closed until a US–Iran deal, sustaining concern over energy prices.
• Australia’s Reserve Bank hiked its policy rate for a third consecutive time Tuesday, taking the policy rate to 4.35% from 4.1% by a vote of 8-1 on the policy committee, with the dissenter looking for no change. Guidance at the Governor Bullock press conference suggested that the RBA now sees the policy rate as “a bit restrictive” and that hikes wouldn’t aid the fight against the inflation over the next six months. Short Australian yields fell sharply as the market read this guidance as far more dovish than expected – Australian two-year interest rate swaps fell seven basis points.
• Australia’s services PMI was revised up to 50.7 in April from 50.3 and 46.3 in March, signaling modest growth. Activity and jobs increased, but domestic demand and new orders fell amid higher fuel costs from the Middle East war. Export orders recovered slightly. Input costs and selling prices rose at their fastest pace since 2022 and early 2023 respectively, while business sentiment stayed muted.
• US factory orders rose 1.5% m/m in March 2026, beating the 0.5% forecast after a 0.3% gain in February. Durable orders were up 0.8%, led by a 3.6% jump in computers and electronics on strong AI and data-center demand, and higher transport equipment. Nondurable orders rose 2.1%, the highest since October 2022. Orders ex-transport were up 1.6%, ex-defense 0.9%.

Key Points

• Equities: US and Europe slipped on oil and tariff worries, while Asia rallied as chip stocks drove record highs
• Volatility: Geopolitics and oil strength are pushing volatility higher, with hedging demand rising
• Digital Assets: Bitcoin holds near USD 81k with Ether steady, while altcoins edge higher and ETF demand via IBIT and ETHA supports sentiment
• Fixed Income: Global bond yields jump on the latest surge in crude oil prices. US Treasuries eyeing cycle highs
• Currencies: USD firms on surge in crude oil prices. AUD weak after dovish RBA guidance relative to expectations
• Commodities: Gold and silver on the defensive after surge in crude oil prices on fresh US-Iran confrontation in Persian Gulf