US GDP expected to highlight steady growth in Q3

• The US Gross Domestic Product is expected to have expanded at an annualised rate of 3.2% in Q3.
• Market players will also pay attention to the GDP Price Index and its potential impact on Fed’s decision.
• The US Dollar Index heads into the release with a clear bearish tone.

The United States (US) Bureau of Economic Analysis (BEA) will publish the first preliminary estimate of the third-quarter Gross Domestic Product (GDP) on Tuesday, at 13:30 GMT. Analysts expect the data to show annualized growth of 3.2%, following the 3.8% expansion in the previous quarter.

Markets expect solid GDP expansion to continue in the three months to September

Growth in the US seems to have picked up pace after contracting by 0.5% in the three months to March, and the expected 3.2% reading, despite being below the previous one, should indicate healthy economic progress. And, in fact, growth in the US does not seem to be a problem these days. Rather than that, the focus is on a weak labor market. It’s also on the Federal Reserve (Fed) and the future of monetary policy, which is clearly related to the tepid employment situation.

Alongside the GDP headline, the BLS will release the GDP Price Index – also known as the GDP deflator – which measures inflation across all domestically produced goods and services, including exports but excluding imports. The index stood at 2.1% in Q2, a quite encouraging level given the 3.8% posted at the beginning of the year.

Also, it is worth noting that the Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.5%, according to the latest estimate. The figure is not an official forecast, but as the Atlanta Fed site notes, it serves “as a running estimate of real GDP growth based on available economic data for the current measured quarter.”

There is, however, a caveat: solid employment creation throughout Q2 largely contributed to stable consumption levels. That would not be the case in Q3, as the labor market has loosened beyond levels the Fed would consider comfortable. The Unemployment Rate rose to 4.6% in November, according to the latest Nonfarm Payrolls (NFP) report, exceeding expectations of 4.4%. Job creation in the same month accounted for 64K, yet previous months’ readings were downwardly revised, meaning employment in August and September combined is 33,000 lower than previously reported. October data is missing due to the government shutdown, which clearly worsened the employment situation.

So, on the one hand, watching forecasts and the Atlanta Fed GDPNow model, it seems GDP would result above 3%. A worsened labor market, on the other hand, can take that number way down.

When will the Gross Domestic Product print be released, and how can it affect the US Dollar Index?

As previously noted, the US GDP report is due at 13:30 GMT on Tuesday, and is expected to impact the US Dollar (USD). The market reaction could be overstretched given the ongoing winter holidays and the reduced trading volumes that typically accompany them.

Given the broad USD weakness, a negative reading is likely to have a wider impact on the American currency and send it further south. A better-than-anticipated figure, on the contrary, could bring some air to USD bulls, yet it is unlikely to change its predominant bearish trend.

Valeria Bednarik, FXStreet Chief Analyst, notes: “The US Dollar Index (DXY) hovers around 98.30 ahead of the announcement, not far above its December low at 97.87. From a technical standpoint, the DXY is bearish. In the daily chart, a flat 100 Simple Moving Average (SMA) at around 98.60 attracts selling interest, containing advances. In the same chart, a bearish 20 SMA accelerates its slide above the larger one, reflecting mounting selling pressure. Finally, the same chart shows that technical indicators maintain downward slopes within negative levels, in line with lower lows ahead.”

Bednarik adds: “A poor GDP reading could push the DXY towards the mentioned monthly low, with additional slides exposing 97.46, the intraday low from September 30. Further declines should see the index nearing the 97.00 threshold, where the decline is likely to decelerate. Friday’s high at 98.42 provides immediate resistance ahead of the 100-day SMA at 98.60. Once above the latter, 99.00 comes as the next barrier.”