US Close: Stocks rebound, US Economy Shrank in Q1, FX volatility surges, Oil rallies, Gold stabilizes

US stocks got a boost from strong earnings and mixed economic data that still suggests the economy is on solid footing as consumer demand continues to handle surging prices. Facebook, McDonalds, and Qualcomm all posted strong earnings that kickstarted today’s rally.

The first quarter headline GDP miss does not tell the whole story as personal consumption and domestic demand remain very strong.  Exports just can’t keep up with imports, which suggests the economy is still robust and that inventory investment will improve.

Everyone one on Wall Street knew to expect enhanced volatility in the first quarter given the war in Ukraine, the impact of the omicron wave, and as the economy grappled with inflation.  Jobless claims also remained very low, which suggests the labor market is still very hot. Today’s economic data does not change anything for the Fed and markets should continue to think they are on a clear path to raise rates rapidly over the next couple of policy meetings. 


Currency volatility is here to stay.  The JPMorgan global volatility (G7) index jumped to 10.58%, the highest levels since the pandemic.  The dollar rally is being fueled by macro drivers that include Russia halting gas supplies to Poland and Bulgaria, further action from the BOJ, and as China sticks to their zero-COVID strategy.

Dollar gave back some gains following the GDP miss, but most FX traders would not be surprised if the greenback’s rally is not ready to end. 


Crude prices are rallying as an EU embargo seems more likely to happen after Germany dropped its opposition. The war in Ukraine still provides tremendous uncertainty for the crude supply outlook.  Now that Germany is getting closer to being able to have a full embargo on Russian energy, Russia might become more aggressive in cutting off supplies. 

The short-term outlook for crude isn’t that bad given the US economy is still on solid footing and on hopes that China’s COVID outbreak is improving.  Even a stronger dollar can’t derail the rally in crude prices, which suggests that a bottom has been put in place. 


Gold prices are holding up despite a massive move in the US dollar.  This is a tough environment for bullion as stocks rebound, the dollar doesn’t want to stop rallying, and as jewelry demand across Asia takes a hit from China’s lockdowns.  What is helping gold is that fixed income traders are content with where Treasury yields trade and probably won’t expect a major move until the FOMC decision next week. 

Gold will eventually see safe-haven flows but first the dollar rally needs to exhaust itself.  Earnings season has delivered cloudy outlooks and Russia’s talk of nuclear escalation and cutting off energy to Poland and Bulgaria should eventually trigger some flows back to gold. Gold seems poised to consolidate between the $1850 and $1900 level leading up to the FOMC decision next week.  

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya