US Data Surprises Negative, But Similar Trends In Other Major Economies

USD FX indices look too elevated relative to recent downside momentum in data surprises for the economy (EASIs). The Citi data surprise index for the US sits back at -32.4, which is fresh lows since early August 2022. However, an important caveat is that outside of the UK, other major economy EASIs are in negative territory as well.

• The first chart below plots the Citi EASIs for the US, EU, Japan, China and the UK. The US is the weakest but only marginally (excluding the UK).
• Arguably we would need to see greater divergence in terms of downside US surprises relative to other major economies for this to present a more material USD headwind.

Fig 1: Major Economy Citi EASIs

Source: Citi/MNI - Market News/Bloomberg

• The other factor is that actual US growth forecast revisions have been only very modest to the downside. The second chart below plots the J.P. Morgan growth forecast revision index (FRI), which measures the extent to which JPM economists are revising up or down their US growth outlook, against the Citi EASI for the US.
• The run of downside data surprises has not led to material downside revisions by US economists at JPM yet. Again, if we were seeing more downside in terms of US growth expectations, we might have expected more USD headwinds to emerge.

Fig 2: Citi US EASI & J.P. Morgan Growth FRI

Source: Citi/J.P. Morgan/MNI - market News/Bloomberg