Today brings forth a heavy economic docket with US Q2 GDP data likely to be the headline event risk for the session. Similar data out of Brazil, France and Norway will also be published. If US growth reports undershoot expectations, it could reinforce growing recession fears and inspire liquidation in risk-on assets as traders redirect capital to haven-linked instruments like the US Dollar and Treasuries.

On an annualized quarter-on-quarter basis, US GDP data is expected to show a 2.0 percent growth rate, slightly lower than the previous 2.2 percent print. At the Jackson Hole symposium, Fed Chairman Jerome Powell said the growth outlook has “deteriorated” amid the ongoing US-China trade war. SF Fed President Mary Daly recently pointed to weakening inflation expectations and expressed concern about rising corporate debt.

The Fed’s approach to policy remains in a wait-and-see mode, though mounting rate cut bets suggest market participants are expecting for the Fed to deliver more stimulus than they have conveyed they would. Brewing storm clouds from abroad – like Europe – have also contributed to the negative growth outlook and has put investors on high alert. Amid the uncertainty, the US Dollar and Treasuries continue to see high capital inflow.

NOK traders will also be closely watching the publication of Norway’s GDP data. Over a quarter-on-quarter timeframe, economists are expecting a growth rate of 0.5 percent, a relatively reliving forecast after the economy shrunk 0.1 percent in Q1. The export-driven economy continues to face pressure as regional demand out of Europe – its main trading partner – continues to fall against the backdrop of fragile Brexit developments.

CHART OF THE DAY: US Dollar Index Rises with Fed Rate Bets as Yields on German Bunds, Treasuries Fall

USD chart created using TradingView