USD/CAD drifting below 1.2950 after market reacts to Cohn resignation

• The CAD receded on Gary Cohn resignation, protectionist agenda still in play from Trump.
• The Asia session is providing support for market sentiment, cooling the Cohn sell-off.

The USD/CAD pair is softening in Tokyo trading following a quick spike in the overnight session, and the pair is currently testing just below 1.2930.

Risk appetite evaporated in broad markets in early Wednesday trading on the announcement that Gary Cohn, Donald Trump's top economic advisor, is resigning from his position at the White House.

Gary Cohen is likely resigning thanks to Trump's steel tariff plans which fly squarely in the face of Cohn's free-market leanings. Despite Cohn's neutral announcement where he refused to nail his resignation on any particular issue, his departure from the White House certainly exposes the Loonie to downside risks as free market dealings lose a major proponent in Cohn, with the remainder of Trump's inner circle largely in the protectionist camp.

The USD drove higher against the CAD on the news, as traders readjust their opinions on the USD'CAD's standing: with Cohn gone, Trump is more likely to pull off his tariffs, which will damage trade between the US and Canada. The Loonie's reaction was bearish, though markets have stabilized in Asia trading, and the pair is slowly pulling back down.

USD/CAD Technicals

The USD has climbed against the CAD consistently for most of February, and Tuesday marked the pair's first losing day in seven consecutive trading sessions. H4 candles show the pair deeply into a bull run, and yesterday's knock lower already appears to be running out of steam. Intraday support can be found at 1.2860 and 1.2805, with resistance at 1.2950 and the 1.3000 major handle.