MAJOR PAIRS:
LONG/SHORT - taken position
BUY/SELL - pending order
Risk Factor - green “" means high level of confidence (low level of uncertainty), grey "" means medium level of confidence, red "” means low level of confidence (high level of uncertainty)
Source: Growth Aces Forex Trading Strategies
EUR/USD: U.S. GDP Disappoints. Fed Sees Weaker Growth Due To Transitory Factors.
(profit taken, buy again at 1.0940)
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[li]The Commerce Department said today that U.S. GDP expanded at an only 0.2% annual rate. That was a big step down from the fourth quarter’s 2.2% pace and marked the weakest reading in a year. The market had expected the economy to expand at a 1.0% rate.
[/li][li]The sharp growth slowdown is probably not a true reflection of the economy’s health, given the role of temporary factors such as the weather and a labor dispute at normally busy West Coast ports.
[/li][li]The weather impact was evident in weakness in consumer spending. Growth in consumer spending slowed to a 1.9% rate. That was the slowest in a year and followed a 4.4% pace in the fourth quarter.
[/li][li]Real nonresidential fixed investment decreased 3.4% in the first quarter, in contrast to an increase of 4.7% in the fourth.
[/li][li]The strong USD weighed on trade that subtracted 1.25 percentage points from first-quarter growth.
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[li]The Federal Reserve ended a two-day meeting with little hint of when it will begin lifting its benchmark interest rate.
[/li][li]The Fed’s rate guidance mirrored what it gave last month. The statement said: “The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term.” This time the central bank did not effectively rule out hiking rates at its next meeting, as it was in March. While that makes a June move possible, the weak economic data take a June hike off the table.
[/li][li]The Fed pointed to weakness in the U.S. labor market and economy. The central bank acknowledged that economic growth “had slowed during the winter months, in part reflecting transitory factors.” The Fed added that spending declined, business fixed investment softened and recovery in housing remained slow. and exports “declined.” It repeated that inflation continued to run below target.
[/li][li]The central bank will have at least two months of economic data to consider before its next policy-setting meeting in June, when it also issues new economic projections and conducts a press conference with Fed Chair Janet Yellen. In our opinion a hike in September is still possible.
[/li][li]We took profit on our long EUR/USD position at 1.1120. The speculative community that had been extremely short on the EUR/USD by historical standards and recent EUR/USD rise may have triggered a short squeeze. We expect some corrective moves now and will be hunting for lower levels to get long again.
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Source: Growth Aces Forex Trading Strategies