New Zealand GDP q/q Spike Trade 09/19/12 (+35 pips)

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6:45pm (NY Time) NZ GDP q/q Forecast 0.4% Previous 1.1%
ACTION: NZD/USD BUY 0.7% SELL 0.1%

Definition

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“Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation’s currency. GDP is the broadest measure of activity and the primary gauge of the economy’s health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation’s currency.”

UPDATE: The NZD GDP came out at a positive number (0.6% vs. 0.4% forecast), which gave us an immediate trigger to SELL the AUD/NZD pair. Although Henry issued the trade at around 1.2670, after a couple of re-quotes, he got filled at 1.2654. Shortly after, the AUD/NZD dropped to the 1.2635 and we closed half of our trade position for about 20 pips of profit and moved the SL to break-even. All in all, it was a great quick spike trade, and eventually the market dropped down below our take-profit level of 1.2605, for a total of 35 pips of profit.

About Kelvin Ching

I'm a professional Forex trader and I have been trading for over 7 years. I was a series 3 broker and a registered CTA with the NFA, the main regulatory agency in the United States, and I have been involved at the highest levels in commodity trading. I also have a background in Information Technology, graphics design, and programming... I'm the co-founder of CurrencyNewsTrading.com, a site dedicated to fundamental analysis and news trading.

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