When is the Advance US Q3 GDP report and how could it affect USD/JPY?

US Q3 GDP Overview

Thursday's economic docket highlights the release of the Advance third-quarter US GDP report, scheduled at 12:30 GMT. The world's largest economy is expected to have expanded by a 2.4% annualized pace during the third quarter. This would mark a sharp reversal from the 0.6% fall in the previous quarter and the 1.6% decline registered in the first three months of the year.

Economists at Société Générale offer a brief preview of the key macro data and write: “We calculate a 3% gain for real GDP, the key economic release of the week. We think that it could be even higher. What does that do for recession calls? Temporary reconsideration is our answer. Companies are becoming more conservative as compensation pressures build.”

How Could it Affect USD/JPY?

Ahead of the release, the emergence of some US dollar buying assists the USD/JPY to rebound swiftly from the vicinity of the 145.00 mark, or a nearly three-week low touched earlier this Thursday. A stronger GDP print will pour cold water on expectations that the Fed will soften its hawkish stance amid signs of a slowdown in the US economy. This, in turn, will lift bets for more aggressive Fed rate hikes in future and provide a fresh lift to the greenback, setting the stage for some meaningful upside for the major.

Conversely, a weaker reading would add to growing market worries about a deeper economic downturn and prompt fresh selling around the buck. That said, a big divergence in the monetary policy stance adopted by the Fed and the Bank of Japan might continue to act as a tailwind for the USD/JPY pair. Investors might also refrain from placing aggressive bets ahead of the BoJ meeting on Thursday, suggesting that the immediate market reaction is more likely to be limited.

Key Notes

  •  US Q3 GDP Preview: Dollar bears to retain control on weak GDP print

  •  US GDP Preview: Forecasts from eight major banks, strong rebound to break two quarters of negative growth

  •  USD/JPY bounces off multi-week low, finds decent support ahead of 145.00 mark

About US GDP

The Gross Domestic Product Annualized released by the US Bureau of Economic Analysis shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better-than-expected number is seen as positive for the USD, while a low reading is negative.