TORONTO, April 22 (Reuters) - The Canadian dollar steadied near a six-week high against its U.S. counterpart on Wednesday as oil prices rose and investors awaited signs of diplomatic progress to end the war in the Middle East.
The loonie was trading nearly unchanged at 1.3660 per U.S. dollar, or 73.21 U.S. cents. On Tuesday, the currency touched its strongest intraday level since March 13 at 1.3629.
"Tuesday’s price action suggests markets remain more focused on global risk appetite than on domestic fundamentals," analysts at Monex Europe said in a note.
Iran seized two ships in the Strait of Hormuz on Wednesday, tightening its grip on the strategic waterway after U.S. President Donald Trump called off attacks with no sign of peace talks restarting.
"Should a ceasefire extension hold, and oil prices stabilise, we could see CAD recover toward its recent highs. But until there is tangible progress on the diplomatic front, we expect choppy trading conditions to persist," the Monex analysts said.
The safe-haven U.S. dollar (.DXY), rose against a basket of major currencies and the price of oil was trading 4.2% higher at $93.42 a barrel.
Oil is one of Canada's major exports, which have been disrupted in the past year by hefty U.S. tariffs on critical sectors, such as autos, steel and aluminum. The United States-Mexico-Canada Agreement, a continental trade pact, is set for review by a July 1 deadline.
Canada is not a supplicant that will allow the United States to dictate the terms for a review of the USMCA, Prime Minister Mark Carney said.
Domestic data showed that new housing prices fell 0.2% in March from February.
February retail sales data, due on Friday, could offer additional clues on the state of the domestic economy, with economists expecting a monthly increase of 0.9%.
Canadian government bond yields were mixed across the curve, with the 10-year down less than a basis point at 3.478%.
Reporting by Fergal Smith; Editing by Kirsten Donovan
