Forex Trading Library

What Matters in Today’s US GDP Figures?

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Global markets cheered up after the headlines of the OPEC deal to cut and limit oil production. This is likely to remain the main driver of the market over the next few days. However, all eyes will be on the US Session today, as we wait for final GDP revision for the second quarter of this year, which is likely to have a notable impact on the markets as well.

Definitions

GDP: the Gross Domestic Product Annualized figure (released by the US Bureau of Economic Analysis) shows the monetary value of all goods, services, and structures produced within a country in a given period of time.

Revised & Final GDP: the GDP usually has three releases, the initial release, revised and final reading. The revision might come to the upside, downside or even remain unchanged.

Why Are GDP Figures Revised Sometimes?

This is a quarterly measure of the economic performance. The advanced release is based on some of the economic releases rather than all the figures. Therefore, most of the data used to calculate the Advanced GDP is based on estimates rather than actual figures. The second (revised) reading takes into consideration a number of new figures as well; therefore, the second release might have a bigger effect, especially if the reading comes with a notable revision. The final reading includes the rest of the economic releases, making is the most accurate representation of the GDP for the mentioned quarter.

Why Is This Important?

GDP Annualized is a gross measure of market activity because it indicates the pace at which a country’s economy is growing or shrinking.

Impact on USD

Generally speaking, a high or better than expected reading is seen as positive for the USD, while a low or lower than expected reading is negative.

Expectations

Indicator

Forecast

Prior

Final GDP

1.3%

1.1%

GDP Price Index

2.3%

2.3%

PCE Price Index

2.0%

2.0%

Core PCE Price Index

1.8%

1.8%

What Matters The Most In Today’s Figures

Traders need to be very careful in reading the figures today because the market will not depend solely on the GDP. The most favorable inflation index for the Federal Reserve will be released as well, which is called the Core PCE Price Index. Expectation points to stabilization at 2%. Any reading above that level means that a December rate hike is on the table again, which may push the US Dollar higher again. On the other side of the coin, any slowdown would decrease the chances for a rate hike this year. Thus, the USD decline may resume.

 

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