Oil falls as Russia downplays additional OPEC+ cuts -

“The only thing worse than starting something and failing … is not starting something.” —Seth Godin 

HEADLINES

• US dollar dominance to persist for decades despite challenges - Moody's
• Gold hits 2-month low on US debt talks progress, rate hike bets
• Oil falls as Russia downplays additional OPEC+ cuts
• Wall Street surges as Nvidia sparks rush for AI stocks
• Treasury yields climb as investors assess state of the economy as debt ceiling talks continue
• GBP/USD: Scope for a drop to 1.22 on a three-month view – Rabobank 
• GBPJPY Near Term: Upside favored

US dollar dominance to persist for decades despite challenges - Moody's

The U.S. dollar's dominance in international trade and finance will persist for decades despite new challenges and even when a more multipolar currency system emerges it will be led by the greenback, Moody's Investor Service said on Thursday.

While the multi-decade fall in the dollar's share of central bank reserves, simmering geopolitical tensions and growing brinkmanship in U.S. politics have boosted speculation about an end to the dollar's dominance, at present there are no viable alternatives, Moody's said in a note.

COMMODITIES

Gold hits 2-month low on US debt talks progress, rate hike bets

Gold slid to its lowest in two months on Thursday as optimism around the U.S. debt ceiling talks lowered safe-haven demand for bullion and robust economic data fueled bets of another rate hike by the Federal Reserve.

Gold extended losses after official data showed new U.S. jobless claims rose moderately last week, indicating persistent labor market strength, and revised up the estimated GDP growth last quarter.

Gold, a non-yielding asset, tends to lose appeal in a high-interest rate environment.

ENERGY

Oil falls as Russia downplays additional OPEC+ cuts

Oil prices fell on Thursday after Russian Deputy Prime Minister Alexander Novak played down the prospect of further OPEC+ production cuts at its meeting next week.

Some investors took that as a signal that the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia, together called OPEC+, could consider further output cuts at a meeting on June 4.

Meanwhile, price declines were limited by an unexpected, massive fall in U.S. crude oil inventories in the week to May 19 reported by the Energy Information Administration on Wednesday.

U.S. crude inventories fell by 12.5 million barrels to 455.2 million barrels as imports declined. Analysts had expected an 800,000-barrel rise.

STOCKS

Wall Street surges as Nvidia sparks rush for AI stocks

Wall Street surged on Thursday after a blowout forecast from Nvidia sent the chipmaker's stock soaring and fueled a rally in AI-related companies, while investors watched for signs of progress in U.S. debt ceiling talks.

Nvidia Corp (NVDA.O) jumped 26% to a record high after the world's most valuable chipmaker forecast quarterly revenue 50% higher than estimates and said it was ramping up supply to meet demand for its artificial-intelligence (AI) chips.

Investors had exchanged over $47 billion worth of Nvidia's shares as of mid-afternoon, according to Refintiv data.

Treasury yields climb as investors assess state of the economy as debt ceiling talks continue

U.S. Treasurys rose on Thursday as investors considered what could be next for the economy as debt ceiling negotiations continue and uncertainty about the interest rate outlook intensifies.

Debt ceiling deal negotiations appeared to make progress on Wednesday, fueling hopes that a resolution would be found ahead of the June 1 deadline. A failure to do so could have severe economic consequences, Treasury Secretary Janet Yellen has warned.

Investors also digested minutes from the Federal Reserve’s latest meeting that were published Wednesday and indicated that officials are split on how to progress interest rate policy. Further rate increases therefore do not appear to be off the table ahead of the central bank’s June policy meeting,

ANALYSIS

GBP/USD: Scope for a drop to 1.22 on a three-month view – Rabobank 

“The government’s position has altered significantly since September, but many of the underlying weakness in UK fundamentals remain.”

“Positioning suggests that both the Pound and the EUR are ill-equipped to face disappointing economic data currently and we expect EUR/GBP to trade in a choppy range in the coming weeks. That said, we see scope for cable to drop to 1.22 on a three-month view.”

CHART

GBPJPY Near Term: Upside favored

Technical View: Long position above 171.66. Target 173.37. Conversely, break below 171.66, to open 170.9.

Comments: The pair breaks above the resistance.

Source: Trading Central 

CALENDAR

*Times in GMT

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/markets/currencies/us-dollar-dominance-persist-decades-despite-challenges-moodys-2023-05-25/
https://www.reuters.com/markets/commodities/gold-listless-debt-ceiling-talks-show-no-progress-2023-05-25/
https://www.cnbc.com/2023/05/25/oil-prices-fall-on-us-debt-uncertainty.html
https://www.reuters.com/markets/us/nasdaq-futures-jump-nvidia-leads-ai-driven-rally-2023-05-25/
https://www.cnbc.com/2023/05/25/us-treasurys-investors-assess-economy-amidst-debt-ceiling-talks-.html
https://www.fxstreet.com/news/gbp-usd-scope-for-a-drop-to-122-on-a-three-month-view-rabobank-202305251330