What is GDP in Forex Trading?
GDP (Gross Domestic Product)
Forex Trading Glossary
Quick Answer: GDP measures the total value of goods and services produced in an economy. Forex traders monitor GDP surprises to gauge growth momentum, policy shifts, and potential currency strength or weakness.
What is GDP (Gross Domestic Product)?
GDP is the total monetary value of all finished goods and services produced within a country during a specific period. It's the most comprehensive measure of economic activity and health. Strong GDP growth generally strengthens a currency, while contracting GDP weakens it.
GDP Components
GDP = C + I + G + (X - M)
- C (Consumption): Consumer spending (60-70% of GDP)
- I (Investment): Business expenditures and construction
- G (Government): Public sector spending
- X (Exports): Foreign sales
- M (Imports): Foreign purchases (subtracted)
Impact on Currency Markets
- Strong GDP: Attracts foreign investment, strengthens currency
- Weak GDP: Signals problems, may trigger dovish policy
- Surprise factor: Market moves based on deviation from expectations
- Release schedule: Quarterly, causes 50-150 pip volatility
Related Terms
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