On Thursday May 30th, at 13:30pm U.K. time, the latest GDP growth figures for the USA economy will be published. According to the Reuters and Bloomberg news agencies, after they’ve polled their panel of economists for a collective opinion, the forecast is for the first quarter’s growth to come in at 0.9%, with annualised growth (measured in the quarter), coming in at 3.1%, falling marginally from the 3.2% annual rate recorded in the previous quarter.
A slew of other USA economic data, including the latest advanced trade balance deficit figure, which is forecast to show a further deterioration to -$72.3b for April, will also be published at the same time as the GDP data. This volume of high impact metrics, could cause the values of both the U.S. dollar and USA equity indices to alter, particularly if the readings miss, or beat the news agencies’ forecasts. Therefore, FX traders would be advised to diarise the event, in order to ensure their current USD positions are managed and to make sure they’re in a position to take advantage of any possible dollar or equity market movements.
Analysts, investors and traders, will monitor the GDP data carefully, to establish if the USA trade war versus China, which began to accelerate in Q3 and Q4 2018, finally began to impact on USA commerce. Moreover, the threats surrounding raising tariffs further, began to appear in Q1, whilst the USA govt. also experienced a record long shutdown in Q1, as U.S. lawmakers couldn’t agree to pass a fiscal budget.
Currently at 3.2%, the annualised GDP reading represents a recent peak, after a sustained period of consistent growth has been experienced; from the 1.3% reading registered in the second quarter of 2016. During recent trading sessions, the value of USA market indices and the value of the U.S. dollar, are being affected by the trade war and the increased tariffs, beginning to hit imports into the USA and China, more than other fundamental issues, listed on the economic calendar. Therefore, the possibility exists, irrespective of the GDP reading missing or beating the forecast, that (collectively) market intelligence will simply overlook the result, as it ranks subordinate, to the current geo political and macro economic events, tensions and developments.
On Wednesday May 29th, at 10:40am U.K. time, the dollar index, DXY, traded up 0.10% close to the 98.00 handle at 98.03. Futures markets were indicating a negative open for the New York session; NASDAQ down -1.02% and the SPX down -0.78%. WTI oil had fallen by circa -2.30%. All indications that the markets in the USA (en masse), are fearing that the China-USA trade and tariff issues, will not be resolved over the short term.
