8:30am (NY Time) US ADV GDP q/q Forecast -1.4% Previous -5.5%
ACTION: USD/JPY BUY -1.1% SELL -1.7%
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.
We are looking for a 0.3% deviation on the expected -1.4%. Therefore if we get a -1.1% on the advanced 2nd quarter GDP, it would be US Dollar positive. We will BUY USD/JPY. However, if we get a -1.7% release, then we would be SELLING USD/JPY. With USD being regarded as safe-haven currency, if we get a worse than expected number, we might still see USD getting stronger as traders scramble to BUY US Treasuries, making USD stronger than most european currencies such as Euro and Sterling.
Since this release has a global effect, we must exercise caution and wait for market to retrace, this is for safety purposes as there might be some underlying market condition or order flows waiting to be released immediately after the news. Therefore, instead of jumping ahead of the market, we should wait for the market to establish a clear trend then get in.
UPDATE: GDP came out better than expected at -1.0% versus -1.5% E, but the personal consumption was worse than expectation and previous -5.5% Q1 GDP was also revised down to -6.4%. Market reacted with some disappointment and risk aversion sentiment, then reversed 180 degree as the outlook for a third quarter recovery became a more probable outcome than before. Watch as I analyze the market, wait for a safe entry, and make 50+ pips from this release.
[flv:http://www.newsprofiteer.com/073109-usgdp/073109-usgdp.mp4 480 360]
Related posts:
- US Core Retail Sales m/m 10/14/09
- US Core Retail Sales m/m 11/16/09
- US CPI m/m 10/15/09
- US ISM Non-Manufacturing PMI 11/04/09
- US Core CPI m/m 11/18/09
- US ISM Non-Manufacturing PMI 08/05/09
- US Core Retail Sales m/m 09/15/09
- US Core Retail Sales m/m 12/11/09
- US NFP (Nonfarm Payroll) Employment Changes 01/08/10
- US NFP Nonfarm Payroll Employment Change 04/02/10
{ 2 comments… read them below or add one }
I’m very interested in getting some group insight on this one. It has moved almost 100 pips since the pullback.
Everyone have a great weekend!
Had a good day on the CAD announcement. I did not touch this one because I did not understand the price action after the release. Too bad I didn’t because the move while delayed is significant!