On Thursday, the US Bureau of Economic Analysis published the figures for the US GDP in Q4/2023. Economists at Commerzbank analyze Dollar’s outlook after another clear upside surprise on the US macro data front.
Thursday's figure (+3.3% annualized, price and seasonally adjusted) makes it quite clear that the stellar performance of the US economy continued in the final quarter of last year. It is particularly ‘stellar’ compared to the performance of other currency areas, even if their Q4/2023 figures are still largely missing.
This benefits the Dollar. For two reasons: (1) A robust economy makes it easier for the Fed to remain restrictive for a while longer, i.e. not to cut its key interest rate just yet. (2) Japan's GDP continues to crawl around at pre-corona levels, while Europe's GDP appears to have been stagnant for some time. Dynamic US growth is the big exception among the major currency areas.
It is possible to believe that the US economy has a structural growth advantage in the post-Corona world. If this were the case, it would be an additional argument in favor of the Dollar. It is far from clear whether this is the case. But every quarter that the gap between the US GDP and the GDP trajectories of other currency areas widens, this view becomes more attractive.