- Negative geopolitical climate, cancellation of the Trump-Kim summit, no progress on US-China trade talks, plans of 25% tariffs on vehicles to US, all bolster safe-haven Yen.
- Oil-commodity-linked CAD, negatively affected by talks between Saudi Arabia and Russia to raise output to make up for the drop in production from Venezuela and potentially also Iran.
CAD/JPY is falling for the fourth day in a row and the currency cross is currently trading at around 84.30 down 0.60% on the last trading day of the week.
On the one hand, Yen has seen robust demand from risk-averse trade as traders bought the currency as a safe-haven. US President Trump wrote a letter on Thursday to Kim Jong Un, the North Korean dictator announcing that he was canceling the summit which was meant to take place on June 12 in Singapore; JPY, CHF and gold soared on the news which was perceived as very detrimental for global security.
In the early part of the week, news of the US-China trade war being put “on hold” was also a very bearish news for markets. Additionally, the recent move by the Trump administration, which plans to impose 25% tariffs on imported vehicles, only compound the negative sentiment around equities and therefore bolster the safe-haven Yen.
On the other hand, the Canadian Dollar, the oil-commodity linked currency, finds little support as the black gold retreated almost $5 from its highs of 2018. In fact, Saudi Arabia and Russia are discussing options to raise targets in the supply-cut agreement in order to compensate for the falling production from crisis-stricken Venezuela and impending sanctions on Iran.
CAD/JPY 4-hour chart
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The pair is trading below its 50, 100 and 200-period simple moving averages (SMA) on the 4-hour chart suggesting a strong downward bias. Immediate support is seen in the 83.89-84.00 region as the previous swing low and the psychological figure should offer a scaling point for both bulls and bears. Further down, traders will likely set their eyes on the 82.56 level previous swing low of April 4. To the upside, bulls will likely meet resistance at the 84.50 and 85.15 previous swing levels.
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