Oil gains 2% after Saudi warns short-sellers: 'watch out

“Being challenged in life is inevitable, being defeated is optional.” —Roger Crawford 

HEADLINES

• Dollar index hits two-month high on rising rate bets
• Gold slips as yields rise while debt ceiling talks drag on
• Oil gains 2% after Saudi warns short-sellers: 'watch out'
• Wall St subdued as deadlocked debt ceiling talks stoke default concerns
• Bitcoin climbs back above $27,000 after Hong Kong greenlights some retail crypto trading
• EUR/USD: Support at 1.0730/1.0710 must hold to avert deeper pullback – SocGen
• GBPUSD Near Term: Downside favored

Dollar index hits two-month high on rising rate bets

The U.S. dollar hit a two-month high on Tuesday in line with higher Treasury yields after hawkish comments from Federal Reserve officials led investors to position for the possibility of further rate hikes.

Regional Fed Presidents James Bullard and Neel Kashkari on Monday indicated that the U.S. central bank may need to continue hiking rates if inflation remains high.

The comments come after statements by Fed Chair Jerome Powell on Friday were viewed as being dovish.

Euro zone data on Tuesday showed that business growth slowed slightly more than thought this month.

COMMODITIES

Gold slips as yields rise while debt ceiling talks drag on

Gold prices dipped on Tuesday as yields climbed while talks over raising the U.S. debt limit stretched to another round, but recovered from session lows as the dollar retreated from earlier highs.

Gold rose from session lows on reports of further negotiations over raising the debt ceiling, said Daniel Pavilonis, senior market strategist at RJO Futures.

Republicans in the U.S. House of Representatives said they were making little progress in negotiations with the White House over raising the debt ceiling, with the nation facing the risk of default in as soon as nine days.

ENERGY

Oil gains 2% after Saudi warns short-sellers: 'watch out'

Oil prices rose more than a dollar a barrel on Tuesday on forecasts for a tighter gasoline market and a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC+ output cuts.

Gasoline futures rose another 1.2% on Tuesday, with analysts expecting a third straight weekly decline in inventories ahead of peak summer travel season which starts on the U.S. Memorial Day holiday on May 29.

STOCKS

Wall St subdued as deadlocked debt ceiling talks stoke default concerns

Wall Street indexes were subdued on Tuesday as talks over increasing the U.S. debt limit stretched to another round, keeping investors jittery on prospects of an unprecedented government default.

White House and congressional Republican negotiators will meet again later in the day to discuss how to raise the $31.4 trillion debt ceiling, with just nine days left for the deadline.

Trading on the S&P 500 index (.SPX) was stuck in a 30-point range in the last two sessions as U.S. debt ceiling talks lingered.

Bitcoin climbs back above $27,000 after Hong Kong greenlights some retail crypto trading

Cryptocurrency prices moved higher on Tuesday after Hong Kong’s securities regulator announced it will allow retail trading of certain crypto assets starting June 1.

Late Monday night, Hong Kong’s Securities and Futures Commission said it would allow retail investors to trade certain crypto assets beginning next month on registered trading platforms. The move was widely expected, with the announcement marking the end of a request for public comment it put out in February on its proposed regulatory requirements around retail trading in crypto.

ANALYSIS

EUR/USD: Support at 1.0730/1.0710 must hold to avert deeper pullback – SocGen 

“EUR/USD is challenging the 100-DMA; it is worth noting that this MA had cushioned downside in March.”

“The pair is close to potential support of 1.0730/1.0710 representing the 23.6% retracement from last year. An initial bounce is not ruled out however the high formed last week at 1.0910 is likely to cap.”  

“Failure to defend 1.0730/1.0710 can extend the decline towards 1.0650 and perhaps even towards March low of 1.0510.”

CHART

GBPUSD Near Term: Downside favored

Technical View: Short position below 1.242. Target 1.237. Conversely, break above 1.242, to open 1.245.

Comments: The pair remains under pressure. Further weakness favored.

Source: Trading Central 

CALENDAR

*Times in GMT

Source: FX Street Economic Calendar

Footnotes
https://www.cnbc.com/2023/05/23/dollar-hits-6-month-high-versus-yen-on-us-rate-expectations.html
https://www.cnbc.com/2023/05/23/gold-eases-on-firmer-dollar-even-as-debt-ceiling-impasse-drags-on.html
https://www.reuters.com/business/energy/oil-prices-rise-outlook-higher-gasoline-demand-tighter-supply-2023-05-23/
https://www.reuters.com/markets/us/futures-inch-lower-debt-ceiling-talks-make-little-progress-2023-05-23/
https://www.cnbc.com/2023/05/23/bitcoin-rises-after-hong-kong-greenlights-some-retail-crypto-trading.html
https://www.fxstreet.com/news/eur-usd-support-at-10730-10710-must-hold-to-avert-deeper-pullback-socgen-202305231310