- Rising chances for the return of the US-China tariff war disappointed commodity-linked currencies.
- A break of 1.3540 seems necessary to aim for 1.3570 and 1.3600 numbers to the north.
With the renewed pessimism surrounding the US-China trade deal, the USD/CAD pair is taking the rounds near 1.3480 ahead of the European open on Monday.
The US President Donald Trump conveyed his disappointments with slow progress over the trade talks and China’s renegotiation tactics via Twitter while threatening to levy fresh tariffs on the Chinese goods.
In retaliation to the President Trump’s threat, China’s Vice Premier have said to cancel his this week’s visit to Washington which might have offered almost final deal documents to sign when the leaders of the two economies will meet next.
The news report sparked fresh tension amid commodity traders as chances of witnessing another round global pessimism driven by the tariff war can’t be denied.
With this, prices of crude, Canada’s main export, plunged across the board and slipped beneath important support confluence comprising 50-day and 200-day simple moving average (SMA) on a daily chart of WTI.
Energy traders ignored speculations of additional sanctions on Iran from the US and gave higher importance to the increase in the US crude rig counts.
Looking forward, the economic calendar is almost silent for the day except for a speech by the Bank of Canada (BOC) Governor Stephen Poloz at an event co-hosted by the Canadian Credit Union Association and Winnipeg Chamber of Commerce.
While the BOC Governor Poloz might not risk deviating from his recent bearish bias, increased hostilities between the US and China could cause additional damages to the Loonie pair.
Technical Analysis
January 04 high near 1.3500 seems immediate resistance ahead of an upward sloping trend-line stretched since January 07, at 1.3540. Should prices rise past-1.3540, 1.3560/65 and 1.3600 may lure buyers.
On the contrary, 1.3430, 1.3400 and 50-day SMA level of 1.3370 can limit the quote’s near-term declines, a break of which might highlights 1.3330 and 1.3300 for bears to watch.
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