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Today, U.S. third-quarter flash GDP figure will be released at 12:30 GMT.
This is the first flash reading of the third quarter GDP of the United States. This would be a very vital piece of an economic docket to assess the health of the economy.
This will be an indicator to see how the US economy is fairing under the Trump administration which reportedly reducing regulations and set to propose tax cuts and infrastructure spending. However, a shortfall in those promises likely to hit both sentiment and growth.
Past trends –
- U.S. GDP picked up pace since 2013 and increased pace in 2014. However, after rising 5 percentage and 2.2 percentage in previous two quarters, U.S. GDP shrank by -0.2 percentage in the first quarter of 2015. Historically speaking U.S. economy usually falters in the first quarter.
- The second quarter was relatively better, with GDP growing at 2.1 percentage in the second quarter from the first.
- Growth has slowed further in the third quarter, with GDP growing about 1.3 percentage.
- Final quarter GDP was much better than expected at 1.4 percentage, still meagre compared to 2014.
- GDP grew by 1.1 percent in the first quarter of 2016 and the second quarter GDP grew by 1.4 percent and finished the year with 3.5 percent and 2.1 percent growth in the third and fourth quarter.
- In the first two quarters of this year, GDP grew by 1.4 percent and by 3.1 percent. See chart for details
Expectation today –
- It is expected on the upper side today. According to median estimate, the economy is expected to grow by 2.5 percent annualized rate in the third quarter.
Market impact –
If the actual number comes in line with the expectations, it would be considered very well and would help in restoring further confidence in the US economy but if that fails to impress and drops below 2 percent (Unlikely), the dollar might take a big hit to the downside. Any major upside surprise over 3.5 percent would be a major boost for the dollar.
A number in line with the expectation is likely to be positive for the Dollar as it already remains upbeat over ECB’s dovish monetary policy yesterday.
The dollar index, which is the value of the dollar against a basket of currencies, is currently trading at 94.8, up 0.26 percent so far today.
