The Atlanta Fed’s GDPNow model has revised its projection for United States second-quarter economic growth downward to 2.5%, retreating from the previous 3.0% estimate following the integration of recent macroeconomic data and revised first-quarter figures. This adjustment signals a cooling in domestic output expectations, which impacts the USD through the interest rate differential channel as investors recalibrate the probability of sustained Federal Reserve hawkishness. Consequently, growth-sensitive assets and the EUR/USD pair face heightened volatility, as a deceleration in US momentum potentially narrows the yield advantage currently supporting the dollar against major peers. Market participants are now shifting their focus toward the upcoming release of the Personal Consumption Expenditures Price Index, which will serve as a critical catalyst for determining whether this growth moderation aligns with the disinflationary path required for future monetary policy adjustments.
US ATLANTA FED GDPNOW MODEL ESTIMATES US Q2 GROWTH RATE AT 2.5%, DOWN FROM 3.0% IN PREVIOUS ESTIMATE, AFTER LATEST ECONOMIC REPORTS, INCLUDING Q1 GDP
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