Gross Domestic Product: The Big USD Profit Indicator

When it comes to measuring a nation’s profits and economic status, the Gross Domestic Product (GDP) is the one to watch out for, and here it comes again. Traders who don’t use technical analysis to forecast price shifts can use fundamental analysis to better act on market volatility. This means following political news and developments and setting trades early to benefit from the widest possible price differences. Whenever a major economic release occurs, the prices can create huge profits and losses, and

checking what the forecasts are saying in advance can literally indicate in which direction to consider trading.

Traders everywhere use this simple tried-and-tested method for choosing market orders and so can you. Keep reading to see the expectation of the coming US Gross Domestic Product release, and a trading strategy used by savvy traders the world over.

2019 US GDP – what we know so far

Rates

The US interest rate increased to 3.2 in Q2 of 2018, then 3.5 in Q3, then things began to slow down as Q4 progressed. Is the bubble at the limit? The GDP will show anomalies if it is. On average, consumer spending has been healthy, but it’s unlikely that Americans can continue the pace for much longer. The Fed deficit is forecasted to pass $1 trillion by 2020, and this weighs heavily on a government that has no real solution in hand just yet.

Investment levels

Last year also saw a continued and concerning slump in residential fixed investments. The concern is surfacing after housing market forecasts resembled levels that are often considered a precursor for a coming financial recession. Any figures similar to the 2007 GDP are cause for concern. In parallel, new business investment has also slowed dramatically since the beginning of 2018, and 2019 continues the trend with worrisome implications.

Exports

The end of 2018 saw a significant decline in goods and services being exported. Trade disputes were the main cause, but not the only factor, and the US and China are not the only nations to see a drop. Q2 of 2019 is approaching, but financial experts are reluctant to suggest an increase on the horizon, again, not a sunny sentiment for USD, one that may well be confirmed by the Gross Domestic Product release.

Having said that, USD did see a brief rise in price after crude oil lost momentum, but this is expected to bounce in the coming weeks. Increasing tariffs on steel and lumber exports barely showed up on the USD price chart.

Nonfarm Payroll

The nonfarm payroll remains strong despite indications of trouble ahead, showing an increase to over 220,000, compared to the 2017 average of 180,000. For now, the unemployment rate stands at 3.7% but that will likely lower in the coming NFP release. A silver lining for America’s economy.

The Bottom line

Experts are forecasting economic growth for the US, based on the Fed release, which is currently in question, rather than the Gross Domestic Product report. Moreover, an unexpected slowing of business investment is in conflict with the rosy predictions for Q2. This means on the day of the report, investors not digging deep in their research will likely set ‘Buy’ orders that will probably fail in the first 24 hours. Expect a spike in prices that will last longer than commonly seen, but be ready for a sharp fall as the reality of the US economy comes to light.

Buying or selling USD on the foreign exchange market (forex) at the time of major news releases is a common practice for traders targeting quick profits, but it can also be risky. Multiple market orders with Stop Loss & Take Profit are probably the safest way to trade during such events. Be sure to set your trades before the news release time, then sick back and wait. The mobile app makes it possible to view and close orders from practically anywhere, so when the market sentiment finally reverses, you can pull your active trades in good time.

Missing the US GDP release is something USD traders make a habit to avoid. You’ve still got time to register for access, and while a modest investment won’t give massive returns, it will open the door to many similar opportunities that can accumulate into something very attractive.

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This article is a marketing communication. It does not constitute investment advice or research. Its content represents the general views of our experts. It does not consider individual readers’ personal circumstances, investment experience, or current financial situation. This article is not prepared in accordance with legal requirements promoting independent investment research. Exness is not subject to any prohibition on dealing before the release of the article. Readers should consider the possibility that they may incur losses. Therefore, Exness is not liable for any losses incurred due to the use of its articles. Please note that past performance of an asset is not a reliable indicator of future results.