Here is the forecast for the US Advanced GDP q/q :
8:30am (NY Time) US Advance GDP q/q
Forecast 3.0% Previous 1.8%
ACTION: SELL EURUSD 3.3% / BUY EURUSD 2.5%
The Trade Plan
We are looking for a deviation between 0.3% ~ 0.5% from the forecasted figure of 3.0%. Therefore if we get a 3.3% on the 4th quarter GDP, it would be US Dollar positive. We will SELL EURUSD. However, if we get a 2.7% release or worse, then we would be BUY EURUSD. We’ll be looking to trade this release based on my Retracement Trading Method; since this is a high impact release, strong market volatility is expected immediately after the release.
We’ll be trading this release using an after-news retracement method. For more information on my trading methods, please read:
http://www.henryliuforex.com/how-to-get-started-with-news-trading/
The Market
According to a medium forecast of 64 economists surveyed by Bloomberg, the majority agree that today’s Adv. GDP for Q4 2011 will be around 3.0%, which is a jump from previous 1.8% of release (in Q3 Final GDP); the Personal Consumption Q/Q is expected at 2.4% with 1.7% prior.
With Fed Bernanke extending the timeframe for Fed policy tightening from Mid 2013 to Late 2014, and the fact that during the FOMC Press Conference, he left the much debated QE3 on the table, today’s GDP release could either fuel the speculation for QE3 on a weak release, or crush the speculation altogether on a much stronger than expected release…
Additional Thoughts
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.
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.”
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Thanks,
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