The Canadian dollar strengthened against the U.S. dollar on Wednesday, supported by a sharp rise in oil prices following renewed geopolitical tensions in the Middle East. Since Canada is a major oil exporter, higher crude prices helped lift the loonie.

At the same time, investors increased their expectations that the Bank of Canada could raise interest rates later this year as rising energy costs may add to inflation. 

Global stock markets weakened amid concerns that higher oil prices could lead to tighter monetary policy. Canadian government bond yields also climbed, reflecting the shift in market expectations.