In contrast to the ADP figure, the publication of the US GDP data (for Q3) did not come as any major surprise. The figure (+2.8% annualized) was close to the median of analyst estimates (2.9%), so it was not a big surprise, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.
Further US growth impulses are needed for new USD strength
“Of course, with growth rates like these, the US continues to have a significant growth advantage over other major developed economies, which are virtually stagnating after the immediate post-corona recovery has ended: the eurozone, the UK, and Japan. And that justifies USD strength. But we have to be careful. This growth advantage is not new. After all, the dollar is already strong. See figure below. US growth strength is already priced into Fed expectations, asset prices and USD exchange rates, it seems to me.”
“Further US growth impulses would be needed for new USD strength. One or the other currency trader may expect a second Trump presidency to provide such impulses. That may well be. I would just like to remind you that other conditions are also needed for this. Among other things, a Fed monetary policy that continues to be guided by reason.”
“Be that as it may, I think it's plausible that some market participants want to wait until the election and do not want to enter active positions based on current real economic data.”
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