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

It has been a quiet Thursday session, with the Canadian, Mexican and British currencies showing limited movement. The Federal Reserve rate cut had little impact on the currency markets. In the U.K., a decline in retail sales was expected, as was the BoE decision to maintain interest rates.
Kenny Fisher
Currencies 10

GBP/USD

GBP/USD is showing little movement in Thursday trade. In the North American session, the pair is trading at 1.2480, up 0.09% on the day.

Retail Sales Fall, BoE Stays the Course

Retail sales slipped by 0.2% in August, the first decline in three months. This reading matched the estimate, so the pound was able to shrug off this soft release. There were no surprises from the Bank of England, which maintained the benchmark rate at 0.75%. The Monetary Policy Committee voted 9-0 to maintain rates With only 45 days to go before the U.K. is scheduled to leave the EU, the October rate decision will be closely watched. At the policy meeting on Thursday, policymakers noted that a hard Brexit would dampen growth and raise inflation.

Technical Analysis

GBP/USD remains within striking distance of resistance at 1.2510. This line was tested on Wednesday but the pound is clearly having trouble moving above this line. On the downside, there is support at 1.2420, which was tested earlier in the week. 1.2380 has strengthened in support, with the pound moving to higher ground. I do not expect any significant movement from the pound in the North American session, as GBP/USD is showing little appetite to move in either direction.

GBPUSD 4-Hour Chart

USD/CAD

USD/CAD has posted modest losses on Thursday. In the North American session, the pair is trading at 1.3254, down 0.34% on the day.

Loonie Shrugs as Fed Lower Rates

In a widely expected move, the Federal Reserve cut the benchmark rate by 25 basis points on Wednesday. What was somewhat surprising, however, was the positive tone from Fed Chair Powell following the rate decision. Often when the Fed lowers rates, policymakers follow up with a pessimistic view of the economy. This time, however, the message was one of cautious optimism. Powell said that domestic economic conditions were “favorable”, and the rate cut was intended to provide “insurance against ongoing risks”. Powell left the door open for further rate cuts, saying the Fed would take further action if the economy weakened.

ADP Payrolls Show Strong Gains

The ADP nonfarm payroll report indicated a strong gain of 49.3 thousand in September. The indicator has looked solid in recent months, with only one decline in 2019. We’ll get a look at official job creation data in October.

Technical Analysis

USD/CAD has been uneventful this week. The line of 1.3282 remains relevant and is currently providing weak resistance. The pair continues to test this line, but has not been able to consolidate above this line. On the downside, there is support at the round number of 1.3200. The next support level is at 1.3140.

USD/CAD 4-Hour Chart

USD/MXN

The Mexican peso is unchanged in Thursday trade. In the North American session, USD/MXN is trading at 19.40, down 0.01% on the day.

Peso Shrugs off Back-to-Back Rate Cut

The Federal Reserve rate cut was met with apathy in the currency markets, as most investors expected this move. The Mexican peso was no exception and has been muted in its reaction to the rate cut. Investor risk appetite remained intact despite the rate cut, after Fed Chair Powell said that domestic economic conditions were “favorable” and that the cut was an insurance policy in case the economy loses steam.

Technical Analysis

The Mexican peso has been rangebound throughout the week. The resistance line of 19.45 remains weak but has proven to be resilient, as USD/MXN is clearly having difficulty breaking above this level. This continues to be the case in Thursday trade. The next resistance line is at 19.70. On the downside, there is support at 0.1920, which has held since August 1.

USD/MXN 4-Hour Chart

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