GBP/USD, USD/CAD, USD/MXN – North American Session Daily ForecastSlow week continues for USD/CAD, GBP/USD and USD/MXN. However, upcoming U.S. inflation and retail sales could shake up the markets
It’s shaping into another quiet day for the British pound, which is showing limited movement on Wednesday. In the North American session, GBP/USD is trading at 1.2333, down 0.21% on the day.
Ahead – U.S. Consumer Spending, Inflation
The U.S. releases key inflation numbers on Thursday, which could have a strong impact on the movement of GBP/USD. The markets are braced for a drop in both CPI and Core CPI, with estimates of 0.1% and 0.2%, respectively.
GBP/USD broke through resistance at 1.2329 on Monday and is currently trading just above this line. Still, the possibility of the pound retracing back below this line remains. If the pair can muster some additional gains, it has room to climb all the way to 1.2420, which is a major resistance line.
On the downside, 1.2329 is providing immediate support. 1.2180 is the next support level.
USD/CAD has posted gains on Wednesday. In the North American session, the pair is trading at 1.3195, up 0.37% on the day.
U.S. Inflation Reports Mixed
The U.S. released Producer Price Index (PPI) data for August, with mixed results. PPI improved to dropped from 0.2% to 01%, although it managed to beat the estimate of zero. Core PPI rebounded with a gain of 0.3%, after a decline of 0.1% in July. There are more key U.S. reports during the week, with CPI on Thursday and retail sales to wrap up the week on Friday. These upcoming releases should be treated as potential market-movers.
USD/CAD continues to show range trading this week. I am keeping an eye on support at 1.3140. If the pair can break through this line, I would expect the Canadian dollar to gain strength and move closer to the 1.31 level. On the upside, the round number of 1.32 remains under pressure.
USD/MXN continues to show limited movement this week. The pair is trading at 19.54 in the North American session, up 0.21% on the day.
Ahead – Key U.S Consumer Reports
The markets are keeping a close eye on upcoming consumer data out of the United States. On Thursday, the U.S releases CPI, the primary gauge of consumer inflation. CPI is expected to drop to 0.1%, down from 0.3% a month earlier. Core CPI is projected to slow to 0.2%, down from 0.3% in July. Weaker inflation points to slower economic activity, and this could lead to lower risk appetite and losses for the Mexican peso, a risk currency.
After sharp gains last week, the USD/MXN has leveled off and remains comfortable around 19.50. Will the pair continue to range trade? If the Mexican peso gains any strength, it could test immediate support at 19.45, which has held since August 12. If the pair can break below this level, I would expect could show some stronger downward movement from the pair. On the upside, 19.70 switched to a resistance role, as the USD/MNX headed to lower ground. There is support is at 19.45, which has held since August 12.