Join Us For Friday’s Roundtable To Cover The US Q2 GDP Print Live
Why is this Friday’s advanced GDP print for the US economy important for you and your trading? Let us count the ways and share with you how you can get the access to our top mind’s view on what the print could mean for your trading.
First, after a dovish FOMC on Wednesday, the market will look to the advanced release of a key US GDP print for Q2, which will be covered by our top analysts, Michael Boutros, Paul Robinson, and David Song in our Roundtable Series. The analysts will investigate and take a live look at the tier-1 Friday print to see if the US economy is falling further or turning and the implications for the USD and the subsequent market opportunities could be big. A surprising story of recent months is the disappointing US data as other economies are doing increasingly well, which has played a large part in the US Dollar Index trading at 14-month lows as of this week.
Want to see how markets react to the first print of US Q2 GDP? Join us for our Live US GDP Round Table Coverage - Implications for Fed Outlook, FX Market
This week, the market saw a rather passive Federal Reserve that decided to hold rates at 1% and mentioned that the Balance Sheet run-off would begin “rather soon.” While the Fed was not expected to lift rates, the shift in language surrounding inflation caused the US Dollar Index to trade to 14-month lows. The balance sheet run off commencement is expected at the September Federal Reserve meeting, but whether or not another hike will come this year (if so, likely in December) remains at near coin-flip odds of close to 50% and GDP could be a deciding factor.
Second, we have seen the US dollar’s performance echo the markets expected odds of another hike in 2017. As the odds lessen, the USD weakens, and if the odds increase, the USD goes strengthens. However, we do not expect the Fed’s terminal rate (the rate at which they will stop raising rates) to far-exceed GDP. Therefore, the GDP is very important, especially as other currencies like the Canadian Dollar, Australian Dollar, New Zealand Dollar, Euro, and others are hitting their highest levels against the USD in years. If the US GDP sees another disappointment, which feels likely given the string of data misses against expectations of 2.5% in Q2, we could see the USD selling continue.
To see how the weakening US Economic performance has affected EUR/USD, look at this chart that show's the Citi Economic Surpise Index for the US Economy plotted against EUR/USD over 2017.
Lastly, it is worth noting that a positive surprise could also shock markets. Per the institutional positioning from the CFTC, the net speculative long position for the USD are at their lowest levels (though still net long) since 2014. Therefore, a positive data surprise from a GDP beat could cause the short positions that have dragged the net-long number lower to unwind and similarly boost the USD.
On Thursday, the dollar ticked higher bucking the recent downtrend, which is likely due to the market trying to anticipate a hawkish development and catch a low in the USD. The higher the dollar rises ahead of the event, the bigger the risk and anticipated volatility lie ahead for tomorrow’s print.
You will not want to miss our live coverage, and you can register here for free.
These reasons and more are exactly why you should join us on Friday 15 minutes before the print through 15 minutes after the 8:30 PM print to see what trading opportunities may emerge.
For your sake, we hope to see you there!
DailyFX Analyst Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.