We are also getting the Canadian monthly GDP release at the same time of this release, therefore I’d recommend to stay out of USD/CAD unless you are planning to trade both news together and they happen to have a conflict…
Here’s the forecast for U.S. Adv. GDP:
8:30am (NY Time) US ADV GDP q/q Forecast 3.4% Previous 5.6%
ACTION: USD/JPY USD/CHF BUY 3.7% SELL 3.1%
Our main focus tomorrow will be on the 1st quarterly (Q1) release of U.S. Advanced GDP number. We are looking for a minimum deviation of 0.3% on the forecasted figure of 3.4%. Therefore if we get a 3.7% on the advanced 1st quarter GDP, it would be US Dollar positive. We will BUY USD/JPY. However, if we get a 3.1% release, then we would be SELLING USD/JPY.
With Adv. GDP being the first GDP release of the three, it is usually the most volatile GDP release with the highest potential of a surprise number. Because the impact of GDP on future monetary policy, this event has the potential of changing both the long-term and short-term trend of USD. It’s definitely an event worth trading.
We should wait until both GDP data (U.S. and Canada) have been released, including their possible revisions, then trade only after we see a significant spike and actual releases hitting or surpassing our deviation. If our deviation is not hit, then we’ll stay out of the market.
DEFINITION:
“GDP, which is defined (from wikipedia) as “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.” GDP number has a direct effect on the Interest rate of the currency, it is one of the news indicators that affects FOMC’s decision directly.”
Related posts:
- UK Final GDP q/q 03/30/2010
- Forex News Trade AUD GDP q/q 05/31/11
- US Canada Trade Balance 08/12/09
- Canada GDP (Gross Domestic Product) m/m 10/30/09
- UK Revised GDP q/q 11/25/09
- US Core CPI m/m 11/18/09
- US CPI m/m 10/15/09
- UK Revised GDP q/q 02/26/2010
- Canada GDP m/m 08/31/09
- Forex News Trading UK Prelim GDP 10/26/10
{ 2 comments… read them below or add one }
Hi Henry
Very confused here…
#1. The forecast number for US Adv. GDP on your news alert & Forex Factory was 3.4%. Trade the News had the forecast number at 3.3%. The forecast number for the Canadian monthly GDP on your news alert & Forex Factory was 0.5%. Trade the News had the forecast number at 0.3%. Which forecast numbers were correct, TTN or yours & Forex Factories??
#2. The US GDP release number undershot by either 0.2% or 0.1% depending on whose forecast number was correct. The initial market reaction was a non event, however, 2 hours after the release the USD/JPY was down 70 pips and the GBP/JPY down 130 pips – why did this happen??
#3. The CAD GDP release number undershot by either 0.2% or was unchanged depending on whose forecast number was correct. Again, there was no immediate market reaction but as in the case above, after 2 hours the Canadian dollar was down against most of the other majors – 130 pips against the Yen, 100 pips against the Sterling, 100 pips against the Euro and 85 pips against the Dollar. Same question as above – why did this happen??
Hoping you can clear up the confusion about the forecast numbers & the market reaction to both these GDP releases.
Looking forward to your words of wisdom.
Gavin
Gavin:
Different news outlets often have different numbers. The forecast is basically the average of a survey of economists’ opinions, therefore the results may differ a bit, but the key is the tradable deviation, which should provide the amount of surprise that is needed for the market to react in an uniformed fashion.
What took place after 30 minutes of a non-event news releases could to attributed to anything, especially when we had Obama speaking in the US right at the time when the market reacted. I have already closed my week before then, so I wasn’t paying attention to the market, but I’d assume that could be the case.