Robert Steven P Nelson

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How do GDP releases affect forex currencies?

Gross Domestic Product (GDP) measures economic growth. Strong GDP readings support currency strength as they signal robust economies and potential tightening by central banks. Weak GDP triggers depreciation due to growth concerns and dovish policies. Institutions trade GDP surprises algorithmically within seconds of release. Retail traders can focus on trends—sustained GDP growth attracts long-term flows. Benefits: GDP confirms or challenges currency valuations. Risks: data is lagging and revisions often alter initial impressions. For example, strong GDP may be ignored if inflation is weak and rates stay low. GDP’s importance lies not in single releases but in shaping macro narratives about currency strength.