By GrowthAces.com

Macroeconomic overview: The U.S. economy expanded a bit faster than previously estimated in the second quarter, recording its quickest rate of growth in more than two years, but the momentum likely slowed in the third quarter due to the impact of Hurricanes Harvey and Irma.

GDP increased at a 3.1% annual rate in the April-June period, the Commerce Department said in its third estimate on Thursday. The upward revision from the 3.0% rate of growth reported last month reflected a rise in inventory investment.

Economic growth last quarter was the quickest since the first quarter of 2015 and followed a 1.2% pace in the January-March period. Harvey and Irma hurricanes, which struck Texas and Florida, could cut as much as six-tenths of a percentage point from GDP growth in the third quarter.

Harvey was blamed for much of the decline in retail sales, industrial production, homebuilding and home sales in August. Further weakness is anticipated in September because of Irma.

Rebuilding efforts are, however, expected to boost GDP growth in the fourth quarter and in early 2018. Signs of increasing inventory investment by businesses could soften the storms’ punch to the economy.

In a separate report on Thursday, the Commerce Department said wholesale inventories jumped 1.0% in August after rising 0.6% in July. Inventories at retailers shot up 0.7% after being unchanged in July. The department also said the goods trade deficit fell 1.4% to USD 62.9 billion in August.

Harvey and Irma continue to impact the labor market and are expected to cut into job growth this month. In a third report, the Labor Department said initial claims for state unemployment benefits increased 12k to a seasonally adjusted 272k for the week ended September 23.

Still, the labor market remains strong. Claims have now been below the 300k threshold, which is associated with a robust labor market, for 134 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller.

Euro zone consumer inflation was smaller than expected in September, the first estimate from the European Union’s statistics office Eurostat showed on Friday. Eurostat estimated that CPI rose 1.5% year-on-year in September, the same as in August. The market had expected a rise of 1.6%.

But the core inflation measure, which excludes volatile prices of unprocessed food and energy, was higher than expected at 1.3% year-on-year against market consensus of 1.2%.

Technical analysis: EUR/USD is back inside the daily cloud. Bears are looking for a close today under 55-dma at 1.1817 to keep the trend alive. A close above this level could be a sign of rebound. A very strong support level is 1.1605 (50% fibo of 1.1119-1.2092 rise).

Short-term signal: We do not think EUR/USD is likely to fall below 1.1605 level (50% fibo of June-September rise). Today’s recovery gives us a hope for revival of rising trend that is why we decided to open another long at 1.1810 with the stop-loss below the above-mentioned 1.1605 and the target at 1.2400.

Long-term outlook: Bullish

GBP/USD: Sterling dropped after UK GDP data

Macroeconomic overview: The UK economy expanded 0.3% on quarter in the three months to June of 2017, unrevised from the second estimate of GDP and following an upwardly revised 0.3% expansion in the previous period. Fixed investment was the main driver of growth while household expenditure rose at a slower pace. From the production side, the services industries were the only positive contributor to output GDP growth.

From the expenditure side, the positive contribution to GDP came from net trade (0.4 percentage points), gross fixed capital formation (0.1 percentage points) and household final consumption expenditure (0.1 percentage points); while business investment and government spending had no contribution to growth.

Exports of goods and services jumped 1.7% after falling 0.3% in the previous period, while imports rose at a slower 0.2%, following a 1% gain in the first quarter. As a result, the trade deficit narrowed to GBP 9.2 billion from GBP 11.3 billion in the first quarter.

Gross fixed capital formation grew by 0.6% (0.5% in the first quarter), with business investment rising 0.5% (0.8% in the first quarter). Meanwhile, household expenditure advanced by only 0.2%, the lowest quarter-on-quarter growth since the fourth quarter 2014, after rising by 0.4% in the previous period. The slowdown was driven by a decline in growth in household expenditure on transport (-2.7%), including motor cars. Government spending edged up 0.1% (0.2% in the first quarter).

Year-on-year GDP growth slowed to 1.5% in the second quarter from 1.8% in the first three months of the year.

Sterling slipped on Friday, hitting a four-day low against the euro after GDP release.

Technical analysis: Downside pressures return and the GBP/USD is working its way lower through the hourly cloud. Thursday’s low at 1.3344 is the nearest support, and 1.3320 (38.2% fibo of August-September 1.2775-1.3657 rise ) is the next one.

Short-term signal: We got long at 1.3385 today with the target at 1.3800. We do not expect the GBP/USD to fall below 1.3216 (50% fibo of August-September rise) and placed the stop-loss below that level at 1.3185.

Long-term outlook: Bullish

TRADING STRATEGIES SUMMARY:

FOREX – MAJOR PAIRS:

FOREX – MAJOR CROSSES:

PRECIOUS METALS:

How to read these tables?

1. Support/Resistance – three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL – It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT – It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In – Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor – green “*” means high level of confidence (low level of uncertainty), grey “**” means medium level of confidence, red “***” means low level of confidence (high level of uncertainty)
5. Position Size (forex)– position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) – position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) – is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) – is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.

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By GrowthAces.com – Daily Forex Trading Strategies