We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The British Pound technical outlook still seems to favor the downside. GBP/CAD may pressure key rising support from August as GBP/AUD could prolong its downtrend. GBP/CHF may fall. Get your $GBP market update from @ddubrovskyFX here: https://t.co/hBOpDKXmfW https://t.co/AJlT2YKeCu
  • USD/JPY is approaching medium-term uptrend resistance and while the outlook remains constructive, the advance may be vulnerable near-term while below confluence resistance. Get your $USDJPY technical analysis from @MBForex here: https://t.co/93D7AyhHtG https://t.co/KQcLLrkMP3
  • AUD/USD has had the most impressive show of trend over the past couple of months with the pair gaining almost 1500 pips from the March low. Get your $AUDUSD technical analysis from @JStanleyFX here: https://t.co/vLz4Rpln3u https://t.co/AOwnJja5V8
  • Has the #Euro been saved? Find out from @CVecchioFX here: https://t.co/eiXfOTyGa6 https://t.co/AyRiYpb4cN
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/ygwjGNvS61
  • The $USD, Euro, British Pound and Australian Dollar will all be at the mercy of political developments in Asia, Europe and North America this week. An avalanche of PMI data will set the backdrop. Find out from @ZabelinDimitri here: https://t.co/L8cfAgVx94 https://t.co/THWhPAS6AM
  • The price of #gold plunged 1% immediately after the stunning US jobs report crossed the wires. Get your market update from @RichDvorakFX here: https://t.co/8i0L6YIqjy https://t.co/y9dIXazJf9
  • S&P 500, Dow Jones, Nasdaq explode higher with stocks surging in response to shockingly better-than-expected monthly jobs data. Get your #equities market update from @RichDvorakFX here: https://t.co/nuMVWOzzuC https://t.co/M3nGBjd7kZ
  • The record-breaking NFPs increase behind us and the FOMC rate decision on Wednesday sets the tone for my trading video: 'Dow Soars Above 200-Day Average on NFPs, Will the #Fed Keep the Dollar Sliding' https://www.dailyfx.com/forex/video/daily_news_report/2020/06/06/Dow-Soars-Above-200-Day-Average-on-NFPs-Will-the-Fed-Keep-the-Dollar-Sliding.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/kquvec5HVc
  • Seasonal factors, oversupply issues and the outbreak of COVID-19 has seen the price of liquefied #naturalgas (LNG) fall to 22-year lows (1.519), with the situation exacerbated by ‘fuller-than-normal’ storage facilities. Get your market update here:https://t.co/VOqfkBQ4aR https://t.co/OsaphmqEmu
FOREX NEWS: Trading the Advance 3Q U.S. GDP Report

FOREX NEWS: Trading the Advance 3Q U.S. GDP Report

2012-10-25 19:00:00
David Song, Strategist
Share:

Trading the News: U.S. Gross Domestic Product

What’s Expected:

Time of release: 10/26/2012 12:30 GMT, 8:30 EDT

Primary Pair Impact: EURUSD

Expected: 1.8%

Previous: 1.3%

DailyFX Forecast: 1.6% to 2.2%

Why Is This Event Important:

The advanced GDP report is expected to show the world’s largest economy expanding at an annual rate of 1.8% in the third-quarter, and the faster rate of growth should increase the appeal of the U.S. dollar as it curbs bets for additional monetary support. As the recover gradually gathers pace, we should see the FOMC preserve its current policy over the remainder of the year, but a growing number of Fed officials may scale back their dovish tone for monetary policy as the region gets on a more sustainable path.

Recent Economic Developments

The Upside

Release

Expected

Actual

Durable Goods Orders (SEP)

7.5%

9.9%

Advance Retail Sales (SEP)

0.8%

1.1%

Consumer Credit (AUG)

$7.250B

$18.123B

The Downside

Release

Expected

Actual

Pending Home Sales (MoM) (SEP)

2.5%

0.3%

Change in Non-Farm Payrolls (SEP)

115K

114K

Personal Income (AUG)

0.2%

0.1%

The resilience in private sector consumption along with the rebound in consumer credit certainly bodes well for the U.S. economy as household spending remains one of the leading drives of growth, and a positive development should prop up the dollar as it dampens the Fed’s scope to expand its balance sheet further. However, the ongoing slack in the housing market paired with the protracted recovery in employment may continue to drag on economic activity, and the FOMC may keep the door open to ease policy further in an effort to encourage a stronger recovery.

Potential Price Targets For The Release

FOREX_NEWS_Trading_the_Advance_3Q_U.S._GDP_Report_body_ScreenShot093.png, FOREX NEWS: Trading the Advance 3Q U.S. GDP Report

As the EURUSD breaks out of the upward trending channel from the end of July, the double-top formation should continue to take shape, and we may see the euro-dollar threaten the 200-Day SMA (1.2833) should the GDP report dampen speculation for a further expansion in the Fed’s balance sheet. However, we will be keeping a close eye on the relative strength index as it comes up against trendline support, and we would need to see the oscillator break the bullish trend for the euro-dollar to fall back towards the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50.

How To Trade This Event Risk

Forecasts for a faster rate of growth instills a bullish outlook for the greenback, and a positive development may pave the way for a long U.S. dollar trade as the data dampens speculation for additional monetary support. Therefore, if the growth rate expands 1.8% or greater in the third-quarter, we will need to see a red, five-minute candle following the print to establish a sell entry on two-lots of EURUSD. Once these conditions are met, we will set the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will generate our first target. The second objective will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in order to preserve our profits.

In contrast, the ongoing weakness in housing along with the protracted recovery in the labor market may continue drag on the economy, and a dismal growth report may spark a bearish reaction in the USD as it fuels speculation for more quantitative easing. As a result, if GDP falls short of market expectations, we will carry out the same strategy for a long euro-dollar trade as the short position mentioned above, just in reverse.

Impact that U.S. GDP report has had on USD during the last quarter

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

2Q A 2012

7/27/2012 12:30 GMT

1.4%

1.5%

-3

-4

2Q 2012 Advanced U.S. GDP

FOREX_NEWS_Trading_the_Advance_3Q_U.S._GDP_Report_body_ScreenShot092.png, FOREX NEWS: Trading the Advance 3Q U.S. GDP Report

Economic activity in the U.S. increased 1.5% in the second-quarter amid forecasts for a 1.4% print, while personal consumption advanced another 1.5% during the same period after expanding a revised 2.4% in the first three-months of 2012. The initial reaction to the better-than-expected GDP report was short-lived, with the EURUSD quickly trading back above the 1.2300 figure, but we saw the pair consolidate throughout the North American session as the exchange rate ended the day at 1.2314.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

Questions? Comments? Join us in the DailyFX Forum

View the Expo Presentation on ‘Trading the News’ For Additional Resources

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.