When is the preliminary US GDP report and how could it affect EUR/USD? – Crypto News – Crypto News
Connect with us
When is the preliminary US GDP report and how could it affect EUR/USD? When is the preliminary US GDP report and how could it affect EUR/USD?

others

When is the preliminary US GDP report and how could it affect EUR/USD? – Crypto News

Published

3 years ago

on

  • GDP in the US is expected to rise by 2.6% in Q4.
  • The US Dollar value will probably continue to be determined by risk perception.
  • After data released by US Bureau of Economic Analysis, markets will pay close attention to Q4 earnings reports.

The Gross Domestic Product (GDP) report for the fourth quarter, as released by the Bureau of Economic Analysis (BEA) on January 26th, will show an expansion of the US economy at an annualized rate of 2.6%, as per market expectations, after the 3.2% expansion recorded in the third quarter’s GDP report.

The US Dollar (USD) has been weakening against its major rivals following the Nonfarm Payrolls data for December and the GDP report could trigger the next directional move on the US Dollar.

US GDP forecast: What the numbers could tell us

The release of the preliminary GDP print for the fourth quarter, scheduled for Thursday at 13:30 GMT, is a major event on the US economic calendar. The first estimate is anticipated to show that the world’s largest economy expanded at a rate of 2.6% per annum during the October-December period.

CIBC does not expect much of a reaction from the market as they forecast US GDP release to come out around consensus numbers: “Although momentum tailed off over the quarter, our forecast for an impressive 2.9% annualized advance in Q4 GDP is driven by a strong showing from consumers, reflecting expected increases in both goods and services consumption. We’re in line with the consensus forecast and market reaction should therefore be limited.”

Unveiling the GDP print and its connection to EUR/USD

The release of the GDP report is planned for 13:30 GMT on Thursday, amid the US Dollar’s plummet to a seven-month low due to the Federal Reserve’s dovish turn. The EUR/USD pair is currently supported and stable close to the 1.0900 psychological level. Any weaker US data could trigger a fresh decline in the USD and a further boost to the major pair.

Ahead of the key release, the US Dollar comes under some renewed selling pressure amid retreating US Treasury bond yields and assists the EUR/USD pair to regain some positive traction on Thursday. That said, a modest pullback in US equity futures lends some support to the safe-haven buck and keeps a lid on any meaningful upside for the majors.

Meanwhile, the backward-looking data might do little to influence market expectations about the Fed’s next policy move or provide any meaningful impetus to the Greenback. That said, an upward surprise in the US GDP print could revive bets for a prolonged policy tightening by the Fed and prompt some near-term short-covering around the USD.

Conversely, a weaker-than-expected reading should be enough to reaffirm bets that the US central bank will pivot to a somewhat less hawkish stance. This could be enough to exert additional downward pressure on the US Dollar and allow the EUR/USD pair to push towards the 1.1000 level.

Eren Sengezer, Analyst at FX Streetoffers a brief technical Outlook for the major and writes: “EUR/USD continues to trade with the ascending regression channel coming from early January after having tested the lower limit of it on Wednesday.”

Eren also outlines important levels to trade the EUR/USD pair: “1.0900 (psychological level, mid-point of the channel) aligns as interim resistance. Once EUR/USD stabilizes above that level and confirms it as support, it is likely to face hurdles at 1.0930 (multi-month high) and 1.0980 (static level, former support) before eyeing 1.10000 (psychological level).”

“On the downside, 1.0880 (lower limit of the channel, 20-period Simple Moving Average (SMA)) forms first support. If that level fails, the pair could extend its slide toward 1.0850 (50-period SMA) and 1.0800 psychological level. He further adds.

Related content

About US Gross Domestic Product

The Gross Domestic Product Annualized report, as released by the US Bureau of Economic Analysis, measures the total monetary value of all goods, services, and structures produced within the United States during a quarter. GDP is a gross measure of market activity that indicates the pace of economic growth or decline. Generally, a high reading or better-than-expected number is positive for equities, while a low reading is negative.

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Trending