GBP/USD has started the trading week with considerable losses. In Monday’s North American session, the pair is trading at 1.2420, down 0.60%.
Pound Sparkles on Dismal Core Retail Sales
The pound ended the week with sharp gains, as the dollar sagged following mixed consumer spending data in the United States. Retail sales slowed to 0.4% in August, but this beat the forecast of 0.2%. Core retail sales crashed to zero, down from 1.0% a month earlier. Investors are keeping an eye on Wednesday, with the U.K. releasing consumer inflation and the Federal Reserve holding its monthly policy meeting.
After sharp gains on Friday, GBP/USD has retracted in Monday trade. The pair easily broke past resistance at 1.2420, but a retracement on Monday has seen GBP/USD drop back to this line. The next resistance line is at 1.2510 – this line was under strong pressure on Friday, but has some breathing room as the pound trades at lower levels. On the downside, 1.2329 is providing support. Traders should note that the pair has been showing volatility since Friday.
USD/CAD has started the new trading week with slight gains. Currently, the pair is trading at 1.3246, up 0.24% on the day.
Demand for Canadian Securities Dip
Foreigners purchased less Canadian-denominated assets in July. The total value of such purchases fell by C$1.17 billion, missing the estimate of a gain of C$2.53 billion. This marked the fourth decline in five months, which means there is less demand for the Canadian dollar – clearly not a positive development for the currency. On Tuesday, Canada releases manufacturing sales, a key report. The markets are expecting a decline of 0.3%, and if the forecast is within expectations, there is a strong likelihood that the loonie will lose ground.
USD/CAD continues to exhibit range trade. There is immediate support at 1.3282 – this line was active in Monday’s Asian session, but the pair has lost some ground since then. On the downside, the round number of 1.3200 is not particularly strong, but held last week as USD/CAD showed limited movement.
It’s been a slow start for the pair on Monday. In the North American session, USD/MXN is trading at 19.43, up 0.14% on the day.
There are no major U.S. releases until Wednesday, so traders shouldn’t expect fundamentals to have much impact on USD/MXN before mid-week trading. As well, the Federal Reserve releases its rate statement on Wednesday, an event which could affect the direction of USD/MXN.
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. At the same time, the pair has not pushed downwards, so this line remains fluid. If the pair is unable to push back above this line, I would expect it to remain between 19.45 and 19.20, which is the next support line. On the upside, 19.70 is the next line in resistance.
This article was originally posted on FX Empire
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