What will happen? The US Q2 Gross Domestic Product will be announced at 15:30 MT time (GMT+3) on Thursday, July 29…
The US has joined the rest of the world in recession
The US economy has been hit hard by the coronavirus outbreak. The country has now recorded more than 123,000 coronavirus cases, the most of any country in the world. President Donald Trump, who had talked about reopening the economy for Easter, on Sunday extended the national social distancing guidelines to April 30. The impact of such a rapid spread is enormous – 3.28 million people filed for unemployment insurance.
US Economic forecast from credible banks from all over the world
- Goldman Sachs is one of the largest investment banking enterprises in the world, and is a primary dealer in the United States Treasury security market. The firm expects the GDP will plummet by 24% in the second quarter of 2020.
- Economists from Deutsche Bank even compare the foreseen recession with the records of World War II and forecast the US economy to contract by 12.9%.
- Analysts from JPMorgan, one of the largest banking institutions in the United States, have more positive expectations than others. They believe that US GDP will decline by 2% in the first quarter and by only 3% in the second.
- Economists from Bank of America are confident that the US economy has already fallen into recession. They predict US GDP to fall by 12% in the second quarter.
- Morgan Stanley is an American multinational investment bank. Its analysts see the present US recession as more severe than it was in 2001 but less than in 2008.
- Economists of UBS, a Swiss multinational investment bank, expect US growth to drop by almost 10% in the second quarter of 2020.
What does it mean for traders?
There are no improvements in controlling coronavirus yet in the USA, that means macro uncertainty will prevail. Over the past two weeks the dollar has posted its biggest weekly rise since the 2008 financial crisis and then its biggest weekly drop since 2009. Yet as signs of funding stress have eased, but not abated, the dollar remains at elevated levels.
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 overall market sentiment is risk-on. The S&P 500 index (US 500) is getting close to the all-time high. Oil is recovering quickly from its recent losses.
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.
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!