Forex News
- US GDP growth for the third quarter was revised to 4.4%.
- The USD Index stays in negative territory below 99.00.
The United States' (US) real Gross Domestic Product (GDP) expanded at an annual rate of 4.4% in the third quarter of 2025, the US Bureau of Economic Analysis (BEA) reported on Thursday in its second estimate. This print came in above the first estimate and the market expectation of 4.3%.
"Real GDP was revised up 0.1 percentage point from the initial estimate, primarily reflecting upward revisions to exports and investment that were partly offset by a downward revision to consumer spending. Imports were revised up", the BEA explained in its press release.
Market reaction
This report failed to trigger a noticeable market reaction. At the time of press, the US Dollar Index was down 0.15% on the day at 98.65.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
- Initial Jobless Claims increased to 200K vs. the previous week.
- Continuing Jobless Claims went down to 1.849M.
The number of US citizens submitting new applications for unemployment insurance rose to 200K for the week ending January 17. The latest print came in short of initial estimates (212K) and was a tad higher than the previous week’s 199K (revised from 198K), according to a report from the US Department of Labour (DOL) released on Thursday.
Additionally, the 4-week moving average decreased by 3.750K, bringing it to 201.5K from the revised average of the previous week (205.25K).
The report also indicated that Continuing Jobless Claims dropped by 26K to 1.849M for the week ending January 10.
Market reaction
The Greenback resumes its decline on Thursday, prompting the US Dollar Index (DXY) to challenge its critical 200-day SMA in the 98.70 region. The resurgence of selling interest in the buck remains unchanged in the wake of US data releases and despite the decent rebound in US Treasury yields across the curve.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
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