USD/CAD extends the gap-up opening as trade tension weighs on commodities

• USD/CAD takes the bids, following the gap-up opening, as investors dump commodities amid the US-China trade war.
• The US Dollar (USD) weakness, on the back of Jackson Hole, fails to prevail as risk aversion dominates.

Given the escalating trade war’s negative impact on commodities, USD/CAD currently rises to an intra-day high of 1.3318, in addition to a bullish opening gap to 1.3296, during the early Asian session on Monday.

Commodities couldn’t bear the burden of the US-China trade war after the world’s two largest economies announced fresh tariffs on each others’ goods on late-Friday. The impact turns fierce as China is the world’s largest commodity user.

To make it a brief, China’s tariffs on $75 billion of the US goods were retaliated by increasing duties $500 worth of Chinese goods by the US and a push to the US companies to leave the dragon nation. Even so, the US President Donald Trump regretted not levying higher tariffs on China.

It should also be noted that the US Dollar’s (USD) weakness post-Jackson Hole Symposium, mainly due to the Fed Chair’s statements citing global downside risk, couldn’t last long as investors turn risk-averse at the week-start.

The risk-off mood can better be witnessed in the US 10-year Treasury yield’s slump and a downpour in global equities.

While a trade war is here to stay for a bit longer, market players will also watch over the US Durable Goods Orders and Chicago Fed National Activity Index numbers for fresh direction.

Technical Analysis

Unless breaking 1.3345/50 area, comprising current month highs, the pair is less likely to aim for June month top near 1.3434. As a result, the 21-day simple moving average (DMA) level of 1.3263 can keep being on the sellers’ radar.