TheNews

Trading the News: U.S. Gross Domestic Product (GDP)

What’s Expected:

Why Is This Event Important:

The Fed may stay on course to normalize monetary policy in 2015 as the central bank still anticipates a stronger recovery to materialize over the coming months, and data prints encouraging an improved outlook for growth & inflation may spur a greater dissent within the committee as the economy gets on a more sustainable path.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Existing Home Sales (MoM) (JUL)	-1.1%	2.0%
Advance Retail Sales (MoM) (JUL)	0.6%	0.6%
ISM Non-Manufacturing (JUL)	56.2	60.3

The expansion in service-based activity along with the pickup in household spending may generate a stronger-than-expected GDP print, and a positive development may boost interest rate expectations as Fed Chair Janet Yellen remains upbeat on the economy.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Building Permits (MoM) (JUL)	-8.0%	-16.3%
Non-Farm Payrolls (JUL)	225K	215K
Construction Spending (MoM) (JUN)	0.6%	0.1%

However, easing job growth paired with the slowdown in building activity may drag on growth rate, and signs of a slower recovery may spur a further delay of the Fed’s normalization cycle as the central bank struggles to achieve the 2% target for inflation.

How To Trade This Event Risk

Bullish USD Trade: Growth Rate Expands Annualized 3.2% or Greater

• Need to see red, five-minute candle following the GDP report to consider a short trade on EURUSD.
• If market reaction favors a long dollar trade, sell EURUSD with two separate position.
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit; set reasonable limit.

Bearish USD Trade: 2Q GDP Report Falls Short of Market Expectations

• Need green, five-minute candle to favor a long EURUSD trade.
• Implement same setup as the bullish dollar trade, just in reverse.

Potential Price Targets For The Release
EURUSD Daily

• Near-term breakout in EUR/USD keeps the focus on the topside targets as the RSI retains the bullish momentum; will retail a constructive view along as the pair holds above former-resistance around 1.1180 (23.6% retracement) to 1.1210 (61.8% retracement).
• Interim Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
• Interim Support: Interim Support: 1.0790 (50% expansion) to 1.0800 (23.6% expansion)

Impact that the U.S. GDP report has had on EUR/USD during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
1Q P 2015	05/29/2015 12:30 GMT	-0.9%	-0.7%	-6	+6

1Q 2015 U.S. Gross Domestic Product (GDP)

EURUSD M5: 42 pips rangeprice movement by USD - GDP news event:

more...