US GDP Preview: Good reasons for an upside surprise, but not necessarily a dollar surge

  • The second read of third-quarter GDP is set to confirm a surge of 33.1% annualized. 
  • Previous beats and new data point to an upside surprise. 
  • The dollar may fail to repeat its positive reaction to upbeat data.

The best quarter in history – no downside surprise can take away that characterization of third-quarter growth in the US. The world's largest economy rebounded from the coronavirus-related coma in the second quarter and roared by 33.1% annualized according to the first release. 

Economists expect the second estimate to confirm the first one, yet there are reasons to expect an upside surprise. 

The bullish case for GDP

First, recent economic figures beat estimates – and that includes GDP releases. The consensus for the initial publication was for an increase of 31% annualized and data for the second quarter was upgraded in the second and final publications. 

Source: FXStreet

Secondly, incoming data such as Factory Orders and Personal Income for September beat expectations. These figures were released after the initial GDP data came out. 

Thirdly, German growth figures were upgraded to the upside, from 8.2% to 8.5% quarterly. The roaring back of the global economy from the covid freeze may have been underestimated. 

Why the dollar is unlikely to cheer the data

Markets witnessed a "calendar comeback" on Monday, as Markit's robust Purchasing Managers' Indexes figures triggering a rally in the dollar. It is uncommon to see second-tier statistics having such an impact. 

However, that may have been a one-off event. Moreover, Markit's data is for November while GDP refers to the three months ending in September. Perhaps most importantly, GDP figures face fierce competition with other releases. 

Thursday's Thanksgiving holiday has compressed several other publications to Wednesday. These include Durable Goods Orders for October and Personal Income for October and weekly Unemployment Claims. 

Therefore, it would take a substantial upside surprise – perhaps annualized GDP growth of 34% or higher – to boost the greenback, while a smaller upgrade would probably be shrugged off by investors. Conversely, a downfall to around 32% would probably weigh on the world's reserve currency.

Such significant shifts were earth-shattering in the pre-pandemic era – but these are not normal times. 


Economists may be overly cautious to project a mere confirmation of third-quarter growth, and there is room for an upside surprise. However, timing and other factors may limit the impact on the dollar. 

More When the market shivers, the Fed delivers? Where next for markets

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 


GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 


Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News

Forex Majors