The United States (US) Bureau of Economic Analysis (BEA) will publish the first preliminary estimate of the third-quarter Gross Domestic Product (GDP) on Tuesday, at 13:30 GMT. Analysts expect the data to show annualized growth of 3.3%, following the 3.8% expansion in the previous quarter.
Markets expect solid GDP expansion to continue in the three months to September
Growth in the US seems to have picked up pace after contracting by 0.5% in the three months to March, and the expected 3.3% reading, despite being below the previous one, should indicate healthy economic progress. And, in fact, growth in the US does not seem to be a problem these days. Rather than that, the focus is on a weak labor market. It’s also on the Federal Reserve (Fed) and the future of monetary policy, which is clearly related to the tepid employment situation.
Alongside the GDP headline, the BLS will release the GDP Price Index – also known as the GDP deflator – which measures inflation across all domestically produced goods and services, including exports but excluding imports. The index stood at 2.1% in Q2, a quite encouraging level given the 3.8% posted at the beginning of the year.
Also, it is worth noting that the Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.5%, according to the latest estimate. The figure is not an official forecast, but as the Atlanta Fed site notes, it serves “as a running estimate of real GDP growth based on available economic data for the current measured quarter.”
There is, however, a caveat: solid employment creation throughout Q2 largely contributed to stable consumption levels. That would not be the case in Q3, as the labor market has loosened beyond levels the Fed would consider comfortable. The Unemployment Rate rose to 4.6% in November, according to the latest Nonfarm Payrolls (NFP) report, exceeding expectations of 4.4%. Job creation in the same month accounted for 64K, yet previous months’ readings were downwardly revised, meaning employment in August and September combined is 33,000 lower than previously reported. October data is missing due to the government shutdown, which clearly worsened the employment situation.
So, on the one hand, watching forecasts and the Atlanta Fed GDPNow model, it seems GDP would result above 3%. A worsened labor market, on the other hand, can take that number way down.
When will the Gross Domestic Product print be released, and how can it affect the US Dollar Index?
As previously noted, the US GDP report is due at 13:30 GMT on Tuesday, and is expected to impact the US Dollar (USD). The market reaction could be overstretched given the ongoing winter holidays and the reduced trading volumes that typically accompany them.
Given the broad USD weakness, a negative reading is likely to have a wider impact on the American currency and send it further south. A better-than-anticipated figure, on the contrary, could bring some air to USD bulls, yet it is unlikely to change its predominant bearish trend.
Valeria Bednarik, FXStreet Chief Analyst, notes: “The US Dollar Index (DXY) hovers around 98.30 ahead of the announcement, not far above its December low at 97.87. From a technical standpoint, the DXY is bearish. In the daily chart, a flat 100 Simple Moving Average (SMA) at around 98.60 attracts selling interest, containing advances. In the same chart, a bearish 20 SMA accelerates its slide above the larger one, reflecting mounting selling pressure. Finally, the same chart shows that technical indicators maintain downward slopes within negative levels, in line with lower lows ahead.”
Bednarik adds: “A poor GDP reading could push the DXY towards the mentioned monthly low, with additional slides exposing 97.46, the intraday low from September 30. Further declines should see the index nearing the 97.00 threshold, where the decline is likely to decelerate. Friday’s high at 98.42 provides immediate resistance ahead of the 100-day SMA at 98.60. Once above the latter, 99.00 comes as the next barrier.”
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Economic Indicator
Gross Domestic Product Annualized
The real Gross Domestic Product (GDP) Annualized, released quarterly by the US Bureau of Economic Analysis, measures the value of the final goods and services produced in the United States in a given period of time. Changes in GDP are the most popular indicator of the nation’s overall economic health. The data is expressed at an annualized rate, which means that the rate has been adjusted to reflect the amount GDP would have changed over a year’s time, had it continued to grow at that specific rate. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
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