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USD/CAD gaps into 1.30 as risk-off returns to markets on sunk G7 summit

2018-6-11 10:47:45Trading Strategies
USD/CAD gaps into 1.30 as risk-off returns to markets on sunk G7 summit

The USD/CAD gapped higher into the new trading week, peaking at 1.2988 as risk-off flows marked the start of the new trading week following President Trump's abrupt departure from this weekend's G7 summit meeting in Canada, and the president's virulent Tweets from aboard Air Force One en route to Singapore, lambasting Canadian Prime Minister Trudeau and throwing a wrench in US-Canada trade relations.


The pair is currently trading near 1.2975 but the week-opening gap remains open from 1.2922 as risk-off sends the US Dollar higher in the early week. US trade relations took a notably sour edge this weekend after Trump ignored data and figures from the other G7 leaders over the weekend, who urged the POTUS to walk back his recent trade tariffs and negotiating stance. Trump brushed off the other leaders' suggestions for taking a more demure approach, and instead suggested allowing Russia to re-join the G7, a country that was ejected from the economic forum after a military annexation of Crimea in 2014. The suggestion was flatly rejected by other leaders, and Trump abandoned the G7 summit a day early to run to Singapore to prepare for the upcoming US-North Korea summit on June 12th. 


This week sees little data for Canada, who is absent from the economic calendar until Thursday's low-tier Housing Price figures, while the US has the Trump-Kim summit beginning early on Tuesday, to be followed by US Consumer Price Index figures at 12:30 GMT on the same day, where the year-on-year figure is expected to tick up slightly from 2.1% to 2.2%.


USD/CAD levels to watch


As noted by FXSTreet's own Yohay Elam, "The pair enjoys upside Momentum, the rise above 50, indicating further gains, and the pair trades well above both the 50-day Simple Moving Average and the 200-day one. 


The psychological level of 1.3000 level remains a battleground. 1.3050 capped the pair several times in May and served as support back in March. 1.3125 was the peak seen in mid-March. Further above, 1.3180 carries some weight due to a past role, and 1.3320 looms overhead.


1.2930 capped the pair early in May and provided some support in early June. 1.2860 was a swing low on June 6th and also held the pair down in late April. 1.2810 was a low point on May 31st. Further down, the 1.2730-1.2750 region served as a cushion in mid-May."