Among economic releases that can help you assess the situation on the market, it is quite hard to find a more important one than the GDP. This is what tells you about the state of an economy, how much it has produced in the previous period and whether it’s contracting or expanding, which means you can really gain a lot of important information from examining it. To give you an idea of just how important this release is and how it can affect your trading, we decided to write this article, with some help from our experts, of course. Read on and learn to use this important source of data.
GDP | What does it mean?
GDP (Gross Domestic Product), as we’ve said, tells you all the most important information about an economy. This, in turn, forces institutions of these economies, most notably central banks, to react in accordance with this report. They have to react because the country’s currency will also be affected by this release. Depending on the country, GDP can be released on monthly or quarterly basis, but regardless of that you can get a pretty good idea how things will develop when the report comes out, especially if you take a look at other releases, as well. This Event will cause increased market activity and allow you to predict decisions of central banks, which affect the whole economy of a country, with a fair degree of certainty. We’ll go into that more in the next paragraph, so stay with us!
GDP | What does it tell us?
The most important reaction to publishing the GDP you need to keep track of is how the interest rates are managed. If the GDP turns out to be rising, the interest rates will go up; otherwise, if an economy is in recession, the central bank will lower the rates to help people spend more and get things on the right track again. Because these releases increase volatility significantly and the market pretty much rearranges itself quickly, you don’t want to want wait for the last release to set your Expiry Time if a country releases several versions of the GDP (like UK and US, for example). These releases extremely rarely differ from the initial one, so if you hesitate you could miss some great opportunities. Also, don’t forget that your economic calendar can tell you when GDP releases are coming out, so you can prepare yourself to react quickly.
GDP | Conclusion
As you can see, every GDP is exceptionally important, not just to traders, but to various institutions, as well. It affects monetary policies of every country in the world and can tell you a lot about the way things will develop after its release. Therefore, always keep track of it, especially of the releases concerning the biggest economies in the world. And if you want to learn more about how to utilize the information you get this way, read our other educational articles and further improve your trading skills.