The impact of GDP on the exchange rate.

GDP - or Gross Domestic Product is one of the most important economic indicators that characterize the performance of a country's economy.

GDP is the total amount of goods and services produced within a country, expressed in monetary terms. The higher the value of this indicator, the more optimistic are the forecasts regarding economic growth in a given state.

A special role is played by the analysis of the dynamics of changes in GDP, which is compared with values ​​for previous years.

The positive dynamics of changes in the Gross Domestic Product is the basis for strengthening the national currency and plays an important role in attracting foreign investment. It is for this reason that some countries use certain techniques to artificially increase GDP.

You can inflate GDP by changing the scheme of its calculations or by including previously not taken into account components into this scheme.

For example, the United States managed to change its GDP by including income from the film industry and research expenditures in its structure. That is why it is impossible to make forecasts for this indicator only on the basis of the actual state of affairs in the macroeconomy; when calculating a country’s GDP, it can be artificially changed in one direction or another to manipulate the exchange rate or create the appearance of economic growth to attract investors.

GDP and Forex trading.

As noted above, a positive change in the production of Gross Domestic Product almost always leads to a strengthening of the national currency .

Since an increase in the quantity of goods produced, in theory, increases the purchasing power of the monetary unit. Accordingly, a decrease in GDP compared to previous reporting periods leads to a fall in the exchange rate. You can find out in advance about when data on the GDP of a particular country will be published thanks to the Forex calendar , which also presents analysts’ forecasts regarding possible results, which also has an impact on the exchange rate.

But the release of the news itself is usually published in the news feeds on the website of one of the Forex dealing centers .

In order to find out what impact a change in GDP has on the exchange rate of the desired currency, simply compare the previous publication of its data and changes in the charts of currency pairs.