Gross Domestic Product (GDP) indicator is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the euro.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Wednesday at 6:00 GMT.
Indicator Background
German GDP is released quarterly, as the largest economy in the Eurozone, Germany’s numbers are highly anticipated by the market. German GDP readings can have a major effect on the movement of EUR/USD.
The Eurozone is struggling, and recent German releases have failed to impress. The markets are bracing for a reading of -0.1% for GDP in Q2. This would mark the first quarter of negative growth in six quarters and could hurt the shaky euro.
Sentiments and levels
Despite cuts to interest rates in June, Eurozone growth and inflation levels have not improved. Together with accelerated preparations for a QE program and Russian sanctions, the euro is set for more losses. A lot depends on GDP numbers, and these do not look too promising. In the US, more signs of job growth and the July JOLTS Job Openings had its best showing since 2001. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.35, 1.3450, 1.34, 1.3325, 1.3295 and 1.32.
5 Scenarios
- Within expectations: -0.3% to +0.1%. In such a scenario, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: +0.2% to +0.6%: An unexpected reading of zero or higher could send the pair well above one resistance line.
- Well above expectations: Above +0.6%: The chances of such a scenario are low. Such an outcome would likely push EUR/USD upwards, and a second resistance level might be broken as a result.
- Below expectations: -0.8% to -0.4%: A lower GDP figure than forecast could cause the pair to drop and break one support level.
- Well below expectations: Below -0.8%. A sharp contraction in growth could push EUR/USD below a second support level.
For more on the euro, see the EUR/USD.
To follow this event live:
Powered by FXstreet.com