FX analysts and traders will concentrate their focus on the latest GDP figures for the USA economy, when the data is published at 12:30pm U.K. time, on Thursday March 28th. The general consensus reached, after news agencies such as Reuters and Bloomberg have polled their separate panel of economists, is for a fall to 2.4% for the fourth quarter (Q4) annualised figure, from the 2.6% figure, recorded for Q3 in 2018. The QoQ figure is a different metric to the YoY figure, which is currently running at 3.10% for the USA economy. The QoQ figure annualised could be looked upon as the final growth figure for 2018.
If the QoQ figure falls to 2.4%, it must be noted that such GDP growth still represents one of the strongest figures in the G10 leading economies, with only India and China outstripping the USA by some distance. Therefore, if the predictions are correct, the figure must be observed in context. Any GDP growth must also be measured against a raft of other current available data for the USA, such as: inflation, employment/unemployment, debt v GDP, deficits and various soft sentiment readings, which could all be considered as benign, as none are currently exhibiting any warning signals, that analysts have major concerns over.
However, Jerome Powell, the Federal Reserve chair, did deliver a dovish forward guidance tone in the FOMC/Fed monetary policy statement recently, which accompanied the latest interest rate decision. In his press conference (after keeping the key rate at 2.5%) he cited FOMC concerns over: employment levels, deficits, inflation and a potential hit on GDP, as the rationale supporting the FOMC decision; to leave the key interest rate unchanged, whilst ruling out rate rises during 2019. This narrative caused the USD to sell of sharply, as Mr. Powell delivered his speech.
There is also a lingering suspicion that global growth has peaked, in what may be a fiscal and monetary policy stimulus driven cycle. The fact that the trade war and China tariff impasse, has still to be successfully resolved, could also be preventing both bullishness and a risk on mood, from returning to equity markets.
This economic calendar, event release, is listed as high impact for a reason; historically the data has the capacity to move the market for the USD currency, particularly if the forecast is missed, or beaten. FX traders who prefer to, or specialise in trading USD pairs, should make sure they’re prepared to be in a position to monitor any FX movements and ensure they’ve ideally placed, to potentially profit from any changes.
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