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USD/JPY binary signal - U.S. GDP - 27 Oct 2017

Signal details
Entry Price: 
113.50
Close Price: 
No Trade
Direction: 
Low
Expiry Time: 
20:00 GMT
How we trade
5/5 of 6 ratings

The United States Bureau of Economic Analysis will be releasing the quarterly gross domestic product (GDP) data today at 12:30 GMT. According to the economists polled, forecasts point to a 2.5% increase in the GDP during the three months ending September. This preliminary GDP data is of course, subject to revisions in the next few weeks.

At an initial glance, the Q3 GDP is seen to be somewhat weaker compared to the second quarter data which showed a 3.1% expansion in the economy. The weaker GDP is expected on the back of the hurricanes that might have significantly impacted the economy during the month of September.

Furthermore, previous data showed a weakness in the U.S. economy during the first two months of the third quarter. Thus, the forecast for the third quarter GDP is expected to come in somewhat weaker than the previous quarter. However, there is still scope for an upside surprise, albeit at later revisions. It is quite possible that further revisions will push GDP data to the upside.

The Atlanta Fed's GDPNow model showed that the U.S. economy might have expanded 2.7% for the third quarter. This is somewhat higher than the estimates that were projected based on a poll of economists. Meanwhile, the New York Federal Reserve's NowCast GDP model is projecting a third quarter GDP of just 1.5%. This puts the projection to the lower end.

With the hurricanes hitting the U.S. shores, data is expected to be distorted, at least in the initial release. For investors the data will show a glimpse of which direction the U.S. economy is heading. This will be crucial as investors are on the edge as the Federal Reserve has signaled that it will hike rates in December.

Thus a validation from the GDP data could help investors to further cement the fact of a rate hike come December. However, with various economic indicators painting a mixed picture, today's outcome is anyone's guess.

Based on the above, today's binary options signal is USDJPY. The currency pair continues to remain trading flat in the medium term. The short term declines suggest that USDJPY could be seen testing the 113.00 level.

Therefore, we purchase daily PUT options at 113.50 for a 20:00 GMT expiry time. We expect that following the failure to break the resistance level at 114.00, USDJPY would be looking to close lower on the day.

binary options signal USDJPY 27 Oct 2017

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.