Влияние показателей ВВП на мировые валюты 2/2

Fundamental analysis: Influence of GDP indicators on world currencies 2/2

In the previous article, we got acquainted with the concept of GDP (Gross Domestic Product) and its leading indicators. This publication will focus on a direct analysis of GDP indicators and their impact on the national currency.

The main approach to the analysis of GDP data

Returning to the previous article, I recall that the GDP data is final and may completely contradict all leading signals and indicators. And in such a case, when the actual indicator of gross domestic product is at variance with the leading factors, the greatest volatility is traced. In this case, the average rating of all factors does not work, attention and decision is made according to the actual indicator.

Pay attention to GDP growth rates! Sometimes there is also an ambiguous situation with GDP data indicators. It happens that the actual value of GDP justified the expectation of the market or remained at the same level, but the national currency was under pressure. The reason for such a move may be a slowdown in GDP growth, namely, the lack of drivers to strengthen the currency.

The world economy and markets are always on the move and the indicator indicating a slowdown or the retention of the former is likely to be regarded by the market as a negative factor. According to this principle, data on GDP are also estimated.

So, if before GDP demonstrated growth in the first quarter of about 0.2%, and in the second 0.1% – this is certainly a bearish signal, indicating a slowdown in the growth of this economy. By itself, it will not cause a significant collapse of the currency, but in the general context of the market can signal a rise in apprehension.

GDP data can be a lever of influence of the Central Bank

Very often, the world’s central banks resort to manipulating the GDP indicators of the country to control the national currency. This is a very subtle and frankly not fair method of regulation, but, alas, it happens. Therefore, the GDP indicator, like many others, should be considered with an eye to the policy of the Central Bank.

Publication of data

With the publication of data on GDP of different countries can always be found in the Economic Calendar.

One recent example was the publication of Canada’s GDP for May 31, which showed an increase of 0.3% on a monthly basis, but also data on the change in Canada’s GDP for the year, which in turn showed a slowdown and confirmed fears of a downward trend in this indicator in the current year.

As a result, the Canadian dollar weakened across the whole spectrum of the market, despite the very optimistic comments of the Bank of Canada, which caused Canadian growth earlier.


Fig. 1. The reaction of the pair USD/CAD on GDP data for Canada


Fig. 2. EUR/CAD pair reaction to Canada GDP data

Gross domestic product is a significant indicator of any country and plays one of the key roles in the development of the economy. Based on the cycle of these articles, you can analyze the key indicators of the economy: employment, inflation and GDP, rationally assess the national currency of any country.

Anton Hanzenko

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