Daily Brief, Oct 31: Economic Events Outlook – GDP Figures Everywhere
Arslan Butt • 2 min read
Good morning, traders.
Today, the market is all about trading the GDP figures from the Eurozone and Canadian economy. Besides, traders will also be utilizing an opportunity to price in or price out the already released Fed rate cut decision.
The Federal Reserve’s interest rate-setting board cut its benchmark interest rate from 2% to 1.75% for the third time in the year 2019. This surely is a dovish policy for the US dollar, but the US dollar started gaining bullish momentum upon its release. Why is that?
As you all know, the 25 base point rate cut was already expected, and traders had already priced in this news. As soon as the Fed cut the rate, we noticed a slight dip in the US dollar, but soon, it recovered from losses. The decision of a rate cut didn’t come as a complete surprise and was already priced in.
Besides, the US central bank also indicated that it would keep the rates on hold until they see an improvement in the economy. Moreover, the GDP and ADP figures were even better than before, and this helps to support the US dollar demand.
Watchlist – Major Economic Events to Trade Today
EUR – Spanish Flash GDP q/q – 8:00 GMT
The National Statistics Institute is releasing Spanish Flash GDP figures at 08:00 GMT. Overall there are two variants of GDP published about 20 days apart – Flash and Final. The Flash announcement is the earliest and thus tends to have the most impact. The Final is not reported for lack of significance.
Since this one is Flash, investors will be closely watching it for a quick trade in EUR/USD. Economists are expecting a 0.4% growth rate in Spain, which is neither better nor worse than the previous month’s data. We may not see any significant movement on its release.
Italian Prelim CPI m/m – Economists are expecting a drop in Italian GDP by -0.1%, but it’s a less worse figure than the previous month’s -0.6%. It looks like the dovish ECB policy has started making its impact.
Eurostat is due to report a change in the price of goods and services purchased by consumers. We should have another batch of low impact economic data.
October’s core and headline Eurozone CPI should arrive in at 1%, and Q3 GDP should linger at 0.2%QoQ (although there is a non-negligible risk of a 0.1% print).
This implies that the European data won’t present many reasons to be optimistic about the euro, but the downside opportunity to the US NFP implies a neutral/modestly-positive sentiment for the cross.
Statistics Canada will be in highlight to release the Canadian GDP figure later in the day. The Gross Domestic Product (GDP) in Canada was worth 1709.30 billion US dollars in 2018.
The GDP value of Canada accounts for around 2.76% of the global economy. GDP in Canada equated 652.54 USD Billion from 1960 until 2018, touching an all-time high of 1842.02 USD Billion in 2013 and a historic low of 40.77 USD Billion in 1961.
Today, economists are expecting a slight surge in the Canadian GDP rate by 0.2% vs. 0% figure during the previous month.
Good luck fellas, stay tuned for forex trading signals and live market updates!