Market Drivers – US Session – Thurs. 26 May 2022

The US dollar attempted to modestly recover early on Thursday but closed the day with losses against most major rivals. Lukewarm US economic data and rallying equities helped particularly safe-haven rival currencies.

US Treasury yields slightly changed on Thursday after the benchmark 10-year note hit a fresh six-week low, with inflation concerns that continue to dissipate amid economic data and corporate results that point to slower economic growth. The yields on 10-year Treasury notes surge 0.9 basis points to 2.756% after falling to 2.706% early in the session. Expectations were high a few weeks ago that the Fed could aggressively hike interest rates to tackle inflation, but latest economic data suggested a weakening economy.

Economic Data

The US second estimate of the 2022 first quarter’s Gross Domestic Product, which growth was downwardly revised to -1.5%, worse than the previous estimate of -1.3% and missing the market’s expectations of -1.4%.

Other Developments

Alibaba stock soars after earnings beat, signs of improving conditions amid another COVID-19 wave. Alibaba Group Holding Ltd.’s U.S.-listed shares climbed 14.8% in Thursday trading to record second best single-day performance after the Chinese giant beat revenue and earnings expectations for the latest quarter.

Gold seesawed between gains and losses, ending the day little changed at around $1,852 a troy ounce. Among US indexes, the Nasdaq Composite was the best performer, up roughly 3%. The S&P 500 and the Dow Jones Industrial Average added around 2% each.

The EUR/USD pair nears its weekly high at the end of the day, trading at around 1.0720. The GBP/USD pair hovers just below 1.2600. The Canadian dollar was among the strongest, with USD/CAD changing hands at 1.2770 as oil prices surged. WTI settled at $113.90 a barrel. The AUD/USD pair, on the other hand, remained steady in the 0.7090 region, unable to take advance of Wall Street´s rally.

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US: Q1 GDP contracts at an annualized pace of 1.5%