The Fed held a much-awaited meeting yesterday. The bank hasn’t made any policy changes. As a result, the USD weakened and EUR/USD rocketed. Jump in to know all the latest news!
How far can US GDP fall?
American advance GDP will be released on April 29 at 15:30 MT. It will definitely move USD as it will show the broadest picture of the US economic health amid the COVID-19.
Instruments to trade: EUR/USD, USD/JPY, USD/CHF, AUD/USD, USD/CNH, USD/CAD
It’s obvious that the present US lockdown will lead to a decline of the GDP. What is more intriguing for investors is how bad the indicator will be. Among other economic indicators GDP is the most significant one as it reveals almost every area of the US economy. The largest part of it, nearly 70%, is money that Americans spend domestically. Consumer spending collapsed, that’s why the future GDP fall will be so huge.
How would you rate the coronavirus recession among other US downturns on the Richter scale, which measures the severity of earthquakes? Didier Sornette, who heads the Financial Crisis Observatory, assessed it at a magnitude of 9, when the crisis of 2008 – 8.5. The St. Louis Federal Reserve anticipates the real GDP to drop by 15%. The Atlanta Federal Reserve gave a much better forecast of a 0.3% decline. According to Goldman, GDP will contract by 10%.
If GDP is greater than its forecast, the US dollar will surge, otherwise – drop.
Be cautious! This is a general rule. These days, the US dollar plays a role of a safe-haven currency. That’s why USD won’t fall so deep as the US GDP.
What will happen? The US Q2 Gross Domestic Product will be announced at 15:30 MT time (GMT+3) on Thursday, July 29…
Today the Fed will make a policy statement at 21:00 GMT+3. This event will affect all the currency pairs with the USD and thus almost the all Forex market!
The Reserve Bank of Australia (RBA) will hold a meeting and announce changes to the monetary policy on August 3, at 07:30 MT time (GMT+3).
What events to follow and how to trade during the week of July 2-6?
EUR/USD retraced to 1.1870 after breaking out this level. It should be just a natural sell-off ahead of the further rally up.