Rates as of 0530 GMT

Market Recap

That was a surprise! US Q1 GDP was expected to have risen 1.0 qoq SAAR in Q1 but instead contracted 1.4. Oops!  But analysts rushed to explain that the figures arent as bad as they look. Personal consumption rose by 2.7 up from 2.5 in Q4 2021, and business investment accelerated to 9.2 from 2.9. But there was a large drag from net exports thanks to a record US trade deficit probably because US demand recovered faster than global demand and a surprise drop in government spending plus some drag from inventories, which grew at a slower pace than in Q4.

The surprisingly slow growth didnt hinder the commodity currencies, which recovered from midday losses to trade higher.

They largely followed stock markets, which managed to rebound after the GDP figures were released. Market talk attributed the rebound to betterthanexpected subscriber numbers from The Company Formerly Known As Facebook, although those numbers came out after the close on Wednesday and didnt prevent a fall early Thursday. Nonetheless, every sector in the SP 500 was up by more than 1.

There was also a big miss in the German inflation figures, which rose 7.8 yoy, the fastest rate since 1950. The market had expected inflation to remain at the previous months 7.6 yoy rate. Only five of the 26 economists polled by Bloomberg had expected a number that high or higher. This suggests an upward surprise is likely for todays Eurozonewide CPI too.

EURUSD continued to decline…