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Oil Drops After Saudi-Russia Output Revival Plan Rattles Traders


By Tsuyoshi Inajima


Oil headed for its longest run of losses since February as investors weighed Saudi Arabia and Russia’s proposal to boost output to ease concerns over supply shortages.
Goldman Sachs Group Inc. is maintaining its bullish view on prices, saying an output increase from Russia and Saudi Arabia would only offset involuntary production declines, and demand is still strong.


Fundamentally, there has been no change in the bearish narrative that drove prices sharply lower last week and especially on Friday. Traders continue to be convinced that Saudi Arabia and Russia are planning to increase output starting in June by at least 1 million barrels per day to make up potential shortfalls from Venezuela and Iran.


The short-covering could become more aggressive if July WTI crude oil can cross to the bullish side of the technical level at $67.32. Otherwise, look for an extension to the downside if $66.00 fails to hold as support.


Crude Oil Chart



Gold Prices on the Verge of Breakdown Despite Risk Aversion


By Ilya Spivak


• Gold prices flirting with breakdown as risk aversion boosts US Dollar
• Down move in bond yields limiting gold weakness, but not offsetting it
• Crude oil prices may resume decline as UK, US markets return online


Gold prices were torn between conflicting cues at the start of the trading week as worries about political instability in Italy crushed risk appetite and sent the US Dollar higher alongside Treasury bonds, pushing yields lower. The greenback’s gains weighed on the anti-fiat yellow metal but the accompanying drop in yields spoke to its appeal as a non-interest-bearing alternative, capping losses.


Gold Chart



JPY Surges on Safe Haven Demand as Italy Sparks Widespread Panic


By Justin McQueen


• JPY Supported by Safe Haven Flow
• EURJPY Falls to Lowest Level Since June 2017


Rising political tensions would see the Japanese Yen among the notable gainers. Uncertainty remains high in Italy, which is likely to be the case in the near term with Italy now heading towards another election later this year.





The Lira Is On a Tear


By Tugce Ozsoy


• The lira advances most in the world against the U.S. dollar
• Policy makers to use one-week repo rate as main policy tool


The lira strengthened the most in the world on optimism the central bank’s decision to bring clarity to its interest-rate regime is a sign it may be able to fight the currency’s depreciation without pressure from President Recep Tayyip Erdogan. Stocks and bonds also rallied.


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