3.2% growth expected for US GDP in Q3

• 3.2% annualised growth is forecast for the US economy in Q3.
• The narrative of US “exceptionalism” is likely to hold firm. 
• The US Dollar’s recovery over recent days remains firmly on track.

3.2% annualised growth is analysts’ forecast for the US economy in Q3. The United States (US) Bureau of Economic Analysis (BEA) will release its preliminary Gross Domestic Product (GDP) estimate for July-September on Thursday. That would represent a solid expansion and a clear improvement on the previous quarter’s 2.2% growth.

US GDP and PCE in focus as geopolitical concerns persist

Ahead of Thursday’s preliminary US GDP figures for July-September, investors remain on edge. Of the three estimates published each quarter, this release is generally regarded as having the greatest market impact. The domestic data calendar also brings the Personal Consumption Expenditures (PCE) report, the Federal Reserve’s (Fed) preferred inflation gauge, alongside the headline growth reading.

Evidence of any impact from tariffs and the continuing Middle East crisis will be a priority for market participants, keeping the GDP release significant. For inflation, the effects of Trump’s tariffs and heightened energy-price volatility are also expected to remain central to market attention.

At its October 28-29 meeting, the Fed’s Committee left the Fed Funds Target Range (FFTR) “on hold”, as widely anticipated. The GDP release follows that decision.

Another component of the report is the GDP Price Index, also known as the GDP deflator. It captures inflation in all domestically produced goods and services, covering exports but not imports. With the US-Iran-Hormuz conflict continuing to affect Crude Oil prices, these figures will take on greater prominence.

A 3.3% rise in Q3 GDP is projected by the Atlanta Fed’s GDPNow model in its October 28 update, compared with 3.4% on October 27. Markets closely monitor the model for its real-time assessment of economic activity.

12:30 GMT GDP release: implications for the US Dollar Index

Thursday’s US GDP report is scheduled for 12:30 GMT. A substantial upside or downside surprise could be decisive for the US Dollar (USD), with markets still focused almost entirely on Middle East developments. Beyond headline growth, investors will examine the GDP Price Index and PCE updates. Both could reshape expectations for the Fed’s interest-rate path and the Greenback’s direction.

Even a GDP reading that meets forecasts should reinforce the US “exceptionalism” narrative, while a stronger result would do the same, supporting the Dollar’s current recovery. The inflation figures, meanwhile, are expected to follow the pattern established by this month’s earlier CPI release.

As the recovery continues, the broader technical picture for the US Dollar Index (DXY) stays positive. Trading near the top of its 18-month range, the index sits above the 102.00 threshold. That positive outlook is expected to hold as long as DXY remains above its 200-day SMA near 99.60. An extension of the advance should encounter the next resistance at the year-to-date high of 102.94 (October 14).

On a pullback, the weekly low of 101.44 (October 22) provides the first downside level. The interim 100-day and 55-day SMAs follow at 100.62 and 100.57, respectively. Below those lies the more significant 200-day SMA at 99.60, ahead of September’s low of 98.59 (September 9).

With the Relative Strength Index (RSI) close to 61 and the Average Directional Index (ADX) approaching 36, momentum signals favour the bulls. These readings suggest that the recent advance is gaining strength.