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USD/CAD stays below 200-day SMA amid Saudi-Iran tussle, mixed trade headlines

Written By Anil Panchal | 2019-09-22 17:43:42 GMT
  • USD/CAD struggles to justify oil-backed CAD strength and recent USD demand.
  • Yemeni rebels warn Iran plans another strike soon, Saudi ForeignMin says it would be an act of war if launched.
  • US-China trade sentiment worsened after Chinese delegations left the US early.

With the weekend trade/political headlines infuriating the global risk watchers, the USD/CAD pair remains below the key simple moving average (SMA) while taking rounds to 1.3260 at the start of Monday’s Asian trading session.

In a reaction to the recent Saudi-led alliance’s military strikes, Yemeni rebels have warned that Iran plans to launch another attack on Saudi Arabian oil and gas facilities. With this, geopolitical tensions concerning the Saudi-Iran tussle have aggravated and the US deployed military forces in the Middle East terming it as a “defensive measure”. On the other hand, Saudi Arabian Foreign Minister Adel al-Jubeir said, as per the CNN, that Iran’s attack, if launched, would risk the possibility of military action.

However, the Wall Street Journal reported that Mohammed Abdul Salam, the Houthi spokesman, denied Saturday that the group had delivered any warning to foreign diplomats about potential Iranian attacks. Further, the French Foreign Minister prepares for peace between the US and Iran while also pushing the Middle East nation to de-escalate the regional tension.

Elsewhere, Chinese delegations’ early exit from the US, coupled with a cancellation of the farm visit, was seen an initial sign of worsening relations between the US-China after the US President Donald Trump said he wants a full deal from China. Though, Chinese media recently conveyed the talks in Washington were ‘constructive’ without giving details of the same.

While geopolitical tension flashes positive signals for the Canadian Dollar (CAD), due to its reliance on Oil, trade pessimism and recently sluggish data from Canada keeps the Loonie under check.

Investors will now watch over July month Wholesale Sales from Canada and the US Manufacturing, Services and Composite Purchasing Managers’ Indices (PMIs) for September for fresh impulse. Though, this wouldn’t reduce the importance of the trade/political headlines.

Technical Analysis

The 200-day SMA continues to exert downside pressure on the prices but 100-day SMA level of 1.3250 stops bears from targeting multiple supports around 1.3180. On the upside, daily closing above 1.3310 becomes necessary to please buyers targeting a fresh monthly high above 1.3385.

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By Anil Panchal
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