The Gross Domestic Product (GDP) report for the first quarter of 2023, as released by the US Bureau of Economic Analysis (BEA) on April 27th, is expected to show an expansion of the US economy at an annualized rate of 2.0%, after the 2.6% growth recorded in the GDP report for the fourth quarter of 2022.

The US Dollar (USD) has been weakening against its major rivals since early March after the collapse of the Silicon Valley Bank reminded markets of the negative impact of the Federal Reserve’s (Fed) tight monetary policy on the financing conditions. The GDP report will provide fresh clues regarding the state of the United States economy in early 2023 and drive the US Dollar’s action by influencing the market pricing of the Fed’s policy outlook.

US Gross Domestic Product forecast: What numbers could tell us

Thursday's US economic docket highlights the release of the preliminary GDP print for the first quarter, scheduled at 12:30 GMT. The first estimate is expected to show that the world's largest economy expanded by 2.0% at an annualized pace during the January-March period.

Yohay Elam, FXStreet Senior Analyst, thinks markets will pay close attention to the severity of the slowdown in the first quarter’s economic activity.

“There is no doubt that the US economy is slowing, but the pace matters. A deceleration to 2% would be the sweet spot for markets – ongoing expansion without fears of an imminent recession,” Elam explains. “It would represent a return to the "new normal" GDP growth figures that characterized the post-financial crisis era. Conversely, a faster clip would stoke fears of further rate hikes by the Fed, while slower growth would raise recession angst. The middle 2% would be Goldilocks for markets and adverse for the US Dollar.”