Explained How “Canada, Europe, U.S and Japan GDP Data” affects Financial Markets Today

July 29, 2016

Fundamental focused especially focused on "GDP Growth Data" is here.

Explained How “Canada, Europe, U.S and Japan GDP Data” affects Financial Markets Today

This article is originally referred from FXNet Fundamental Analysis

Japanese CPI Data has been released and the currency is trading a bit stronger, especially against GBP. Today another GDP data is expected to be released by U.S. Statistic Bureau.

Here, find out how “GDP growth” can possibly affect Forex markets.


The Yen rallied and Asian stock markets traded lower today as all eyes were on the Bank of Japan Friday with more tepid data heaping pressure on policymakers to deliver a one-two punch for the sluggish economy.

However the market was left underwhelmed, with the Central Bank easing further by increasing ETF buying, while rates stay unchanged at -0.1%, and keeping monetary policy base unchanged at 80 trl yen. Attention will now turn to the stimulus package to be announced by Abe on 2 Aug and conjecture will begin on whether they now choose to add more to the reported JPY 28trln in the wake of being disappointed by their central bank. Tokyo is down 1%, Hong Kong -0.75%, Sydney -0.31% and Shanghai 0.1%.

In FX space it has been a wild ride for the Yen this session as poor liquidity and wide spreads saw the currency yoyo between the 105-103 handle before dropping to session lows of 102.70 against the US dollar.

The Euro, Sterling, Aussie and Kiwi all traded higher while gold recovered from an initial drop following the BOJ announcement to post session highs of $1338.50. Oil traded lower again continuing Thursdays miserable performance, as the continuation of the selling bias around the greenback failed to ignite any attempt of recovery. WTI sits at $41.00 and Brent at $42.59.

So to the day ahead and today’s data calendar has plenty to offer. Euro area’s flash inflation data and the first estimate of the GDP growth rate in the second quarter for both the Eurozone and the US are the most important releases. Eurozone Q2 Flash Gross Domestic Production (1000 BST).

Euro area’s economy grew 0.6% in the first quarter (1.7% from year ago), and it is expected to have grown 0.3% in the second quarter (compared with 1.5% a year ago). The joy of beating the US growth rate was thus short lived, and the euro area is seemingly again returning to a slump as the uncertainty ahead of the Brexit referendum, and the unresolved euro crisis, especially relating to banks, Greece and elections in Spain limited activity.

US Advance estimate Q2 Gross Domestic Production (1330 BST). During the first quarter of the year the economy grew at 1.1% annualised pace, but growth is expected to have improved notably in the second quarter.

According to the median forecast, the US is expected to have grown 2.6% in the second quarter. That would be above the 2% average seen during the current recovery, but following the three below-average quarters, it would not necessarily be a trend reversal, but rather a return to the mean.

Canada Monthly Gross Domestic Production (1330 BST) The Canadian economy is expected to have contracted in May after temporary disruptions caused by the Alberta wildfires.

Canada’s real GDP is estimated to have declined 0.5% in May following a 0.1% advance in April, according to market consensus and is likely to put significant downward pressure on the commodity-based Loonie. However, despite the negative projections for May, economists note that it is not a pattern, adding that a recovery is expected in June and July.

Original Source: FXNet Fundamental Analysis

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