The Canadian dollar stabilized near a six-week high against its U.S. counterpart on Wednesday, supported by rising oil prices, while investors await signs of diplomatic progress toward ending the war in the Middle East.

The Canadian currency, known as the "loonie," was traded largely unchanged at the 1.3660 level against the U.S. dollar, or the equivalent of 73.21 U.S. cents. On Tuesday, it had recorded its strongest intraday level since March 13 at 1.3629.

Analysts at Monex Europe indicated that recent market movements reflect investors focusing more on global risk appetite rather than domestic economic factors.

This came amid escalating tensions after Iran seized two ships in the Strait of Hormuz, strengthening its control over this vital maritime corridor, following President Donald Trumps suspension of attacks without signs of resuming peace talks.

Analysts explained that if the ceasefire extension continues and oil prices stabilize, the Canadian dollar could see a recovery toward its recent highs; however, they expected trading to remain volatile in the absence of tangible diplomatic progress.

Conversely, the U.S. dollar, which serves as a safe haven, rose against a basket of major currencies, while oil prices climbed by approximately 4.2% to reach $93.42 per barrel.

Oil is one of Canada's most significant exports, but these exports have faced pressure over the past year due to high U.S. tariffs on key sectors such as automotive, steel, and aluminum. The United States-Mexico-Canada Agreement (USMCA) is scheduled for review by July 1.

In this context, Canadian Prime Minister Mark Carney emphasized that his country will not allow the United States to dictate terms during the agreement review.

Regarding domestic data, figures showed that new home prices declined by 0.2% in March compared to February, while investors await the release of February retail sales data on Friday, with expectations of a 0.9% month-on-month increase.

Canadian government bond yields were mixed across various maturities, with the 10-year bond yield falling by less than one basis point to reach 3.478%.