Forexlive Americas FX news wrap: US GDP dips into negative territory

• US Q1 advance GDP -0.3% vs +0.3% expected
• ADP April US employment +62K vs +115K expected
• US March PCE core +2.6% y/y vs +2.6% expected
• Canada GDP for February -0.2% versus 0.0% estimate
• EIA weekly crude oil inventories -2696K vs +429K expected
• Trump: Carney called yesterday and said ‘let’s make a deal’
• Meta EPS $6.43 versus $5.21 estimate. Revenues $42.31B versus $41.36B estimate
• Microsoft earnings beat expectations
• BOC Minutes: Governing council was split over whether to cut or hold rates
• ECB’s Makhlouf; Price risks less clear in he medium term.
• Atlanta Fed GDPNow growth estimate for Q2 is 2.4%
• USTR Jamieson: We are ‘some weeks out’ on trade deals
• Saudi officials have told allies they can sustain a prolonged period of low prices
• US-Ukraine minerals deal hits a last-minute hurdle
• US pending home sales for March 6.1% vs 1.0% estimate
• Trump blames Biden, says to be patient

Markets:

• Gold down $28 to $3287
• US 10-year yields down 1.2 bps to 4.16%
• WTI crude oil down $2..26 to $58.17 — lowest close since 2021
• S&P 500 up 0.1%

The rates market shifted dovishly after weaker GDP and ADP but the dollar rose anyway.

It was a busy news day and the US dollar was strong against European currencies but sagged during the day against the commodity currencies. Equities also made a huge comeback from -2% to flat. That’s the kind of move you would expect on positive trade news but there wasn’t much, aside from a Chinese report saying that US officials had called to talk, and most of the moves came before that report.

Month end is an obvious culprit and a convincing one. Some might point to higher inflation in the GDP report as a catalyst but the PCE data showed a decelerating trend in the quarter with core PCE at +0.337%
in January, +0.498% in February, and +0.028% in March. In addition, oil prices just wrapped up a catastrophic month, which is deflationary pressure. Still, lower inflation is hardly a USD catalyst, unless your main worry is that the Fed is so far behind the curve that a brutal recession looms.

The loonie got a lift from Trump’s positive comments about Carney and the planned visit with the newly-elected Canadian PM.

This article was written by Adam Button at www.forexlive.com.