GBP/USD, USD/CAD, USD/MXN – North American Session Daily Forecast

British pound surges, while limited movement for Canadian dollar and Mexican peso. All eyes are on U.S. retail sales, which could shake up the currency markets
Kenny Fisher
Currencies

GBP/USD – Pound Jumps to 6-week High

Friday could be a banner session for the British pound, which has surged 1.0% on the day, its biggest gain since September 4. In European trade, GBP/USD is trading at 1.2455, its highest level since July 25.

Party Could Continue With U.S. Retail Sales

The August CPI release slipped to 0.1%, down from 0.3% a month earlier. This matched the estimate. Core CPI, which excludes the most volatile items found in CPI, remained steady at 0.3%, edging above the estimate of 0.2%.

The U.S. will post retail sales, one of the most important economic indicators, later on Friday. Investors are always attuned to key data, so traders should treat retail sales as a potential market-mover. The markets are predicting soft August numbers compared to July. Retail sales is expected to slow to 0.2%, down from 0.7%, while the core release is projected to slow to 0.1%, compared to 1.0% in the previous release. If these estimates prove accurate, we could see the pound rally continue.

Technical Analysis

After testing resistance at 1.2329 throughout the week, GBP/USD finally broken through in Friday’s Asian session. Will the rally continue? Although the upward breakout appears to have plenty of steam, a retracement remains a possibility, so some caution is warranted. The pair certainly has some upward room, as the next resistance line is at 1.2510. On the downside, 1.2329 has strengthened in resistance, following strong gains by GBP/USD earlier in the day.

GBP/USD 4-Hour Chart

USD/CAD

USD/CAD is showing little movement in Friday’s European session. Currently, the pair is trading at 1.3220, up 0.06% on the day.

U.S. Consumer Spending, Confidence Next

With no Canadian events on the calendar, U.S. data will have a magnified effect on the movement of USD/CAD. The markets will have plenty of key numbers to digest in North American trade, with the release of retail sales and consumer confidence reports for August. Both indicators are expected to weaken compared to the previous releases. This could bode poorly for the Canadian dollar, as investors could get nervous over soft data and react by dumping minor currencies like the Canadian dollar.

Technical Analysis

USD/CAD was characterized by range trade for most of the week. However, on Thursday the pair managed to break through resistance at the round number of 1.3200. Will the pair push higher or will it fall back into 1.31-territory? I am keeping a close eye on the 1.32 line, which remains relevant. On the upside, 1.3240 is under pressure and could be tested later on Friday.

USD/CAD 4-Hour Chart

USD/MXN – Peso Strikes 4-Week High

The Mexican peso has been recording slight-but-steady gains during the week, as USD/MXN has fallen 0.80% this week. In Friday’s European session, the pair is trading at 19.37, down 0.35% on the day. Earlier, the pair has touched a low of 19.35, its lowest level since August 13.

Will U.S. Retail Sales Weigh on Peso?

All eyes are on U.S. retail sales, the primary gauge of consumer spending. Investors keep a close eye on key fundamentals, as an unexpected release could have a sharp effect on the currency markets, especially on risk currencies like the Mexican peso. Both the headline and core releases are forecast to fall considerably in August, with estimates of 0.2% and 0.1%, respectively. Weak numbers could cause investor jitters and sour risk appetite. This could lead to USD/MXN moving higher in the North American session.

Technical Analysis

After a week of range trade, USD/MXN headed lower on Thursday. The pair broke through support at 19.45 for the first time since August 14. There is room for USD/MXN to drop, with no support until 19.20. On the upside, 19.70 has strengthened in resistance, as USD/MNX has sustained strong losses this week.

USD/MXD 4-Hour Chart

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