The Gross Domestic Product is an important indicator of economic health in a country. A country’s central bank has expected growth outlooks each year that determine how fast a country should grow, as measured by GDP.
When GDP falls below market expectations, currency values tend to fall and when GDP outdoes expectations, currency values tend to rise. As such this figure’s release is keenly observed by currency traders and can be used to cautiously anticipate Central Bank movements.
When Japan’s GDP shockingly shrunk 1.6% in November 2014, the JPY fell sharply against the Dollar as traders anticipated further Central Bank intervention.