Indicator of Gross Domestic Product on the Forex Market

Indicator of Gross Domestic Product on the Forex Market

Indicator of Gross Domestic Product (GDP) in the Forex Market or it can also be called Gross Gross Domestic Product (GDB) which states the level of economic growth of a country in a certain period of time. GDP value is a macroeconomic indicator that states the total amount of goods and services produced by the state in a certain period of time that can be delivered on a monthly, quarterly, and annual basis. And this value can be used by economists and / or forex investors / traders to see thoroughly the economic health of a country whether it is good or bad.
The higher the GDP value of a country, the stronger the economy of the country so that the demand for currencies will increase as well and will eventually increase the exchange rate and vice versa, the lower the GDP value, the weaker the economy of the country will demand decreasing and ultimately will reduce the exchange rate of the currency.

For example, the GDP of a country increases by 2%, which means that GDP is now 2% higher compared to the previous period and in general GDP is calculated by adding up total consumption, investment, government expenditure and export-import. The higher the GDP it can be said that the economy is growing which results in reduced unemployment and increased wages due to increased labor demand to support the needs of economic growth (many projects are running).

In addition to influencing the currency exchange rate GDP also affects stock market prices. The higher GDP means that businesses in the country are growing and profits are increasing so that the shares of publicly traded companies will increase in price because many investors are looking to buy them. And but if GDP for two consecutive quarters records negative growth, it is certain that the country is entering recession.

Most forex traders focus on two reports issued in the months before the final GDP figure, namely the follow-up report and the initial report. It can also be said that there are 3 times GDP released, namely Advanced GDP (continued), Prelimenary GDP (initial), and Final GDP (end).

Advanced GDP also called GDP First Release or Estimated GDP is released a month after one quarter period ends and this initial data has a very significant influence to make the market more volatile even though there are differences with the latest data (final report GDP) because there are some data that has not been recorded on previous period.

Prelimenary GDP also called Second Realease GDP is released 2 months after one quarter period ends and this report data is more realistic than previous data.

Final GDP is also called GDP Third Release or Revised GDP is released 3 months after one quarter period ends and this is the last (final) data for 1 (one) quarter.

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