Henry Liu
Former FPA Special Consultant
- Messages
- 473
We are also getting the Canadian monthly GDP release at the same time of this release, however I’d recommend to trade the U.S. release only as the market will be paying much more attention to it, especially when the Feds are also watching it. Here’s the forecast for U.S. Adv. GDP:
8:30am (NY Time) US ADV GDP q/q Forecast 3.5% Previous 2.6%
ACTION: 3.8% SELL EURUSD 3.2% BUY EURUSD
The Trade Plan
Our main focus tomorrow will be on the first of three quarterly (Q4) release of U.S. GDP number (ADV). We are looking for a minimum deviation of 0.3% on the forecasted figure of 3.5%. Therefore if we get a 3.8% on the advanced 4th quarter GDP, it would be US Dollar positive. We will SELL EURUSD. However, if we get a 3.2% release or worse, then we would be BUYING EURUSD.
We'll be looking to trade this release based on my Retracement Trading Method; since this is a high impact release, strong market volatility is expected immediately after the release. If we get 0.5% in deviation, then I think we could jump into this trade using Spike Trading Method.
For more information on my trading methods:
Henry's News Trading Methods
The Market
With Adv. GDP being the first GDP release of the three, it is usually the most volatile GDP releases with the highest potential for a surprise number. Because of the high impact GDP has on future monetary policy, and the fact that this will probably be the most important news until NFP release scheduled for next Friday...
The medium forecast out of 67 economists surveyed by Bloomberg agree that the annual GDP rate ending in December 2010 will be at 3.5%. With one of the best retail sales figures in four years for December, record Ipad sales as reported by Apple for this quarter, and some of the highest credit card spendings in 3 years as reported by MasterCard Advisors, we could expect to see an inline with expectation release, if not better. (In my opinion)
Additional Thoughts
US is the largest economy in the world, it's GDP is made up 2/3 of Consumer Spending, and a positive GDP shows resilience in the U.S. economy and a strong message that economic recovery is still live and well in the U.S. Therefore, this release will be considered as risk event by traders.
In the event of a positive surprise, we could also look to trade USDJPY as an alternative for EURUSD.
Pre-news Consideration
I'd stay away from Pre-news because of the uncertainty in the current market, but if I were to force a trade, I would bet on USD long.
DEFINITION:
“GDP, which is defined (from wikipedia) as “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.” GDP number has a direct effect on the Interest rate of the currency, it is one of the news indicators that affects FOMC’s decision directly.”
Historical data and charts on US GDP q/q.
Thanks,
8:30am (NY Time) US ADV GDP q/q Forecast 3.5% Previous 2.6%
ACTION: 3.8% SELL EURUSD 3.2% BUY EURUSD
The Trade Plan
Our main focus tomorrow will be on the first of three quarterly (Q4) release of U.S. GDP number (ADV). We are looking for a minimum deviation of 0.3% on the forecasted figure of 3.5%. Therefore if we get a 3.8% on the advanced 4th quarter GDP, it would be US Dollar positive. We will SELL EURUSD. However, if we get a 3.2% release or worse, then we would be BUYING EURUSD.
We'll be looking to trade this release based on my Retracement Trading Method; since this is a high impact release, strong market volatility is expected immediately after the release. If we get 0.5% in deviation, then I think we could jump into this trade using Spike Trading Method.
For more information on my trading methods:
Henry's News Trading Methods
The Market
With Adv. GDP being the first GDP release of the three, it is usually the most volatile GDP releases with the highest potential for a surprise number. Because of the high impact GDP has on future monetary policy, and the fact that this will probably be the most important news until NFP release scheduled for next Friday...
The medium forecast out of 67 economists surveyed by Bloomberg agree that the annual GDP rate ending in December 2010 will be at 3.5%. With one of the best retail sales figures in four years for December, record Ipad sales as reported by Apple for this quarter, and some of the highest credit card spendings in 3 years as reported by MasterCard Advisors, we could expect to see an inline with expectation release, if not better. (In my opinion)
Additional Thoughts
US is the largest economy in the world, it's GDP is made up 2/3 of Consumer Spending, and a positive GDP shows resilience in the U.S. economy and a strong message that economic recovery is still live and well in the U.S. Therefore, this release will be considered as risk event by traders.
In the event of a positive surprise, we could also look to trade USDJPY as an alternative for EURUSD.
Pre-news Consideration
I'd stay away from Pre-news because of the uncertainty in the current market, but if I were to force a trade, I would bet on USD long.
DEFINITION:
“GDP, which is defined (from wikipedia) as “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.” GDP number has a direct effect on the Interest rate of the currency, it is one of the news indicators that affects FOMC’s decision directly.”
Historical data and charts on US GDP q/q.
Thanks,
Last edited by a moderator:
Things are changing Henry 
