US Final GDP – Forex News Trading
Our focus today turns to US Final GDP, for any potential trades based on the data.
Due:
June 24, 1:30pm BST
Frequency:
Quarterly
Prior: -0.7%
Expected: -0.2%
Low: -0.5%
High: 0.6%
Source:
Bureau of Economic Analysis
Description:
This release measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy and is closely followed by investors because it is an all-inclusive measure of economic activity. The report contains a plethora of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. Components such as consumer spending, business and residential investment, and price (inflation) indexes highlight the economy’s behind the scene drivers. Even more important to Forex traders, this is a data point closely watched by the Fed.
Summary:
GDP data in the first quarter was very poor showing no signs of life shrinking 0.7% which was revised down from the initial reading of 0.2%. This has been attributed to different factors such as smaller inventory build-up, higher imports than preliminary data showed, unusually severe weather, the west coast port strike , and even risk of faulty seasonal adjustments.
This will be the final look at the first quarter GDP and is expected to print at -0.2%.
Expected Market Reaction:
We remain overall bullish the USD with a Fed rate hike likely in the mix for the end of Q3 or beginning of Q4. While we have heard some whispers of liftoff potentially getting pushed back to Q1 of 2016, the large majority of economist are forecasting a hike later this year. A strong US Final GDP could boost that sentiment and offer long opportunities for the USD. On the other side of that coin the market will remain very sensitive to US data, especially data the Fed considers important to policy. A weak number could cause some initial volatility along with immediate USD weakness, however we would expect the market to shake off a weaker number with a focus on a bigger picture and the already fairly low expectations for this print.
Take a look at my weekly Forex news events overview here in order to learn more about interpreting the upcoming US Final GDP data.
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