Because this is the first quarterly release, we are likely to see plenty of market reaction. One thing to remember is that since the figure is expected at 3.2%, even if we were to miss the forecast, I would warn to refrain from selling USD immediately, as USD is still driven more by the FOMC monetary policy rather than economic news.
Here is the forecast for the US Prelim GDP q/q (Q4 2013)
8:30am (NY Time) US Prelim GDP q/q
Forecast 3.2% Previous 4.1% (Final Q3 GDP)
DEVIATION: 0.2% (BUY USD 3.4% / SELL USD 3.0%)
The Trade Plan
We are looking for a deviation between 0.2% ~ 0.3% from the forecasted figure of 3.2%. Therefore if we get a 3.4% on the third quarter (Q4) 2013 GDP, it would be US Dollar positive. We will BUY USD. However, if we get a 3.0% release or worse, then we would be SELLING USD. We’ll be looking to trade this release based on my Retracement Trading Method; since this is a high impact release, strong market volatility is expected immediately after the release.
I’d recommend to use the Recommended Pair above as it is based on my strength meter by pairing up the best currencies in the event of a better/worse news… or you can just use the default pairs for this news: USDJPY or EURUSD
Outlook scoreis derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.
DEFINITION:
“GDP, which is defined (from wikipedia) as “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.” GDP number has a direct effect on the Interest rate of the currency, it is one of the news indicators that affects FOMC’s decision directly.”