US GDP Preview: Weaker-than-expected headline growth number would weigh on the USD – Scotiabank
26.10.2023, 11:39

US GDP Preview: Weaker-than-expected headline growth number would weigh on the USD – Scotiabank

The USD is trading firmly, but a little off its best levels, ahead of US Gross Domestic Product (GDP) data. Economists at Scotiabank analyze Greenback’s outlook.

Expectations of bullish Q3 GDP

Bonds are little changed, however, and crude oil has drifted a bit while G-10 commodity FX is outperforming, if only very modestly, so the risk-off narrative does not fully explain intraday developments on the face of it. 

Part of the story is perhaps that the USD is simply better bid ahead of what is expected to be a solid US Q3 GDP report. Estimates suggest growth is in the region of 4.5% (SAAR), up from 2.1% in Q2. The data is also expected to reflect a sharp slowing in the core PCE data, however (2.5%, from Q2’s 3.7%). 

Slowing price data may take some of the edge off strong growth momentum – as perhaps might the realization that this could be about as good as it gets for the US economy for quite some time. And, of course, a weaker-than-expected headline growth number would weigh on the USD and perhaps force some of the freshly minted longs put on after Monday’s USD drop to liquidate.

 

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