GBP/USD, USD/CAD, USD/MXN – Daily ForecastWeek Starts Slowly for USD/GBP, USD/CAD and USD/MXN
Strong British GDP Propels Cable to 10-month High
The pound has started the week on the right foot, as GBP/USD is up 0.53% in North American trade on Monday. The U.K. economy gained 0.3% in July, bouncing back from a flat 0.0% performance in June. As well, manufacturing production gained 0.3% in June, after a 0.2% decline in the previous release. We’ll get a look at wage growth on Tuesday. The indicator jumped 3.7% in June, and the same gain is projected for July. If the forecast proves accurate, I expect the pound to continue moving higher.
GBP/USD has pushed higher on Monday and broke through resistance at 1.2329 early in European trade. The pair managed to test this line late last week, but was unable to break above it. If the pound can push past this line, there is no real resistance until 1.2420. On the downside, 1.2180 has strengthened as the pair continues to move higher.
USD/CAD has started the new trading week with a whimper, posting small gains of 0.10%. It’s a quiet week, on the fundamental front, with no key Canadian events. This means that U.S. data will have a magnified effect on the pair.
Loonie Shrugs off Superb Jobs Report
The pair was unchanged on Friday, despite a stellar Canadian employment report. The economy created 81.1 thousand jobs in July, crushing the estimate of 18.9 thousand. As well, Ivey PMI, a useful gauge of the health of the economy, improved to 60.6 in August, showing strong expansion. This marked the strongest reading since October.
USD/CAD was range trading on Friday and the lack of movement has continued into the Monday session. This trend could continue into the middle of the week.
On the upside, the round number of 1.32 is the next resistance line. There is immediate support at 1.3140. If the pair can break through this line, I expect stronger movement from USD/CAD.
USD/MXN has started the week quietly. In Monday’s North American session, the pair is trading at 19.53, for a gain of just 0.03% on the day. Earlier on Monday, the pair dropped to 19.47, its lowest level since mid-August.
The peso had a banner week, as the pair fell by 2.6%. On Friday, a soft U.S. nonfarm payrolls report sent the dollar lower. Nonfarm payrolls fell to 130 thousand in August, down from 164 thousand a month earlier.
USD/MXN has leveled off on Monday, after recording sharp losses last week. Is Monday’s flat trading the end of the peso rally, or just a brief respite? We’ll need more time to find out, as the new trading week has just commenced.
On the upside, 19.70 switched to a resistance role, as the USD/MNX headed to lower ground. The next line of support is at 19.45, which has held since August 12.