US GDP Preview: Gloomy numbers to weigh on dollar and impact Powell's speech

Confirming the catastrophe, albeit with a marginal upgrade – that is what economists are expecting for the revised Gross Domestic Product data for the second quarter due out on Thursday at 12:30 GMT. The dollar is set to react to the data within the context of jobless claims and Powell's speech, FXStreet’s analyst Yohay Elam reports.

Key quotes

“The brunt of the coronavirus crisis was felt in the three months ending in June – an annualized drop of 32.9% according to the first read after slipping by around 5% in the first quarter. The consensus stands at a minor upward revision to -32.6% now.”

“If the upbeat narrative prevails and annualized GDP is revised up – especially to above -30% – would support the dollar. A softer crash means a higher base to recover from and a reduced need for stimulus by the Federal Reserve.”

“A downbeat figure – due to coronavirus or any other reason – would send the dollar down amid expectations for additional Fed stimulus. Jerome Powell, Chairman of the Federal Reserve, is due to speak at the virtual Jackson Hole Symposium shortly after the figures are released. He will have received the statistics while preparing his remarks, and they may impact his tone.” 

“In case GDP statistics come within estimates, investors may focus on weekly jobless claims that are published at the same time. After falling below one million, initial applications bounced above that round number, causing concern. Another significant surprise in unemployment claims – whether to the upside or the downside – may steal the show from GDP data.”