US GDP In Focus
The main data focus today, and of this week really, is the prelim Q2 GDP reading in the US. Q1 came in at a healthy 6.4% and the market is expecting a 6.5% reading today. Given the progress made within the US economy over recent months it feels like the expectations are a little low here. One argument for such a muted reading is that retail sales have yet to see a proper recovery. Given the importance of retail sales in calculating GDP, the subdued retail activity over recent months could keep GDP depressed.
However, given the better recovery seen in other parts of the economy and the continued rise in employment and inflation, the broader reopening that has taken place and the ongoing vaccine optimism, there are upside risks into today’s reading. On a very basic level, a strong reading today will be USD positive, a consensus reading will see a muted USD response while a weak reading will see USD heavily sold.
Where to Trade US GDP?
Given the better risk appetite over the last week, the Japanese Yen has been weakening, a theme which looks likely to continue, especially given the BOJ’s reaffirmed commitment to maintaining easing. With this in mind, there is room for USDJPY to break higher if today’s reading is strong. The 109.63 level is the upside marker to watch, a break of which should see a quick move up to 110.92. MACD and RSI both have room to move higher, reflecting the lack of momentum currently.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.