By Samuel Indyk and Rae Wee

LONDON (Reuters) -The dollar slid to a more than two-month low on Monday, extending a downtrend from last week as traders reaffirmed their belief that U.S. rates have peaked and turned their attention to when the Federal Reserve could begin to cut.

The dollar index hit a low of 103.46 in European trade, its weakest level since Sept. 1, extending a nearly 2% decline from last week – the sharpest weekly fall since July.

Against the weaker greenback, the euro hit its highest since August at $1.0937, while the yen firmed to a 6-1/2 week high of 148.1 per dollar.

Markets have priced out the risk of further rate increases from the Fed after a slew of weaker-than-expected U.S. economic indicators last week, particularly after an inflation reading that came in below estimates.

Focus now turns to how soon the first rate cuts could come, with futures pricing in almost a 30% chance that the Fed could begin lowering rates as early as March, according to the CME FedWatch tool.

“The weakness in the dollar is to do with the moves in rate markets, especially after the November Fed meeting and last week’s CPI,” said Dane Cekov, senior FX strategist at Nordea, although he added that there could be weakness in the dollar in the very short term.

“From a technical perspective, the dollar now looks oversold against the euro. Usually you’ll see some sort of consolidation.”

Minutes from the Fed’s latest meeting, released on Tuesday this week, could offer some colour on policymakers’ thinking as they held rates steady for a second time this month.

Sterling was little changed at $1.2467, after earlier flirting with a near two-month peak.

The euro last bought $1.0926 ahead of flash PMI readings in the euro zone due this week and after Moody’s unexpectedly upgraded the outlook on Italy’s ‘Baa3’ sovereign rating to stable from negative and upgraded Portugal’s rating by two notches to ‘A3’.

Nordea’s Cekov said the moves by Moody’s should be a positive for the euro area as they should lead to a lower risk premium for Italian and Portuguese debt.

“In that sense it removes some of the downside risk for the euro. That’s my first impression,” Cekov said.

The Japanese yen remained on the stronger side of 150 per dollar and was last around 0.8% higher at 148.42.

Elsewhere in Asia, the yuan leapt to a more than three-month high against the dollar in both the onshore and offshore markets, as the central bank guided the unit higher and exporters rushed to convert their dollar receipts into local currency.

The onshore yuan and offshore yuan both rose to 7.1633 per dollar, their highest level since Aug. 4.

The Aussie was last 0.5% higher at $0.6547, having struck a three-month high of $0.6563 earlier in the session, while the kiwi gained 0.5% to $0.6022.

China on Monday left its benchmark lending rates unchanged at a monthly fixing, matching expectations, as a weaker yuan continued to limit further monetary easing and policymakers waited to see the effects of previous stimulus on credit demand.

The yuan, which has fallen nearly 4% against the dollar this year in the onshore market, continues to be pressured by a faltering economic recovery in China and as investor sentiment remains fragile.

“I think the theme of a soft Chinese economic recovery will persist for a while,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

“Until we get a more meaningful recovery in the Chinese economy, I think that will be a headwind for the (yuan), Aussie and the kiwi in the near term.”

(Reporting by Samuel Indyk and Rae Wee; Editing by Sam Holmes, William Maclean and Jan Harvey)

By Sinéad Carew and Shristi Achar A

(Reuters) – Wall Street’s three major indexes edged up slightly on Friday as investors digested recent gains while remarks from Federal Reserve officials clouded the outlook about when the U.S. central bank might start cutting interest rates.

Vice Chair for Supervision Michael Barr said he believes the Fed is at or near the peak of interest rate hikes, but San Francisco Fed chief Mary Daly and Boston Fed President Susan Collins highlighted the need for more evidence of cooling inflation.

Adding pressure, shares of Applied Materials fell 4% after its third-quarter report and news the U.S. Justice Department is investigating allegations that the semiconductor equipment maker violated export curbs to China.

Offering equities some support was a decline in the 10-year Treasury note yield, which touched a roughly two-month low during the session.

The S&P 500, the Nasdaq and the Dow registered their third straight week of gains. For the S&P and the Dow it was the longest weekly winning streak since July. For the Nasdaq it would be the longest weekly advance since June.

“The biggest catalyst for stocks today is that we hit a two month low in Treasury yields,” said Robert Phipps, director at Per Stirling in Austin Texas.

While the major indexes had a muted session, Per Stirling’s Phipps pointed to strength in more cyclical sectors.

“Because tech stocks are weak today the S&P 500 is hiding strength in other areas of the market,” he said, pointing to gains in energy, industrial and financial sectors.

The Dow Jones Industrial Average rose 1.81 points, or 0.01%, to 34,947.28, the S&P 500 gained 5.78 points, or 0.13%, to 4,514.02 and the Nasdaq Composite added 11.81 points, or 0.08%, to 14,125.48.

For the week, the S&P 500 added 2.2% while the Nasdaq composite rose 2.4% and the Dow climbed 1.9%.

“We’ve come a long way. We need to digest some of these moves and look for what the next catalyst is. Earnings is behind us. The Fed is on hold and is going to be in December. The equity market is looking for guidance,” said Jack McIntyre, portfolio manager at Brandywine Global in Philadelphia.

Energy, finishing up 2.1%, was the biggest percentage gainer among the 11 major S&P 500 sectors as oil prices settled up more than 4%. [O/R]

The communication services index was the biggest percentage loser as heavyweight Alphabet fell more than 1%. Technology, the second weakest sector was dragged down by Microsoft, which fell 1.7%.

ChatGPT maker OpenAI, which is backed by Microsoft, said on Friday that its Chief Executive Officer would leave after the board said he was “not consistently candid in his communications”.

Countering its megacap peers, Amazon.com gained 1.6%. The online retailer announced it is trimming jobs at its Alexa voice assistant unit, citing shifting business priorities and a greater focus on generative artificial intelligence.

The small-cap Russell 2000 index rallied 1.4% on the day, outperforming broader markets. The index, whose members benefit more than larger cap companies from easing of lending rates, also outperformed for the week, adding 5.4%.

Retail stocks were in demand with Ross Stores rallying 7.2%. The company, which sells off-price clothing and home products, raised its annual earnings forecast after topping third-quarter sales and profit expectations.

Also Gap shares surged 30.6% as the apparel retailer posted better-than-expected third-quarter results due to improving sales at Old Navy and easing supply expenses.

ChargePoint Holdings shares slumped 35.5% as the electric-vehicle charging network provider lowered estimates for third-quarter revenue. It also named Rick Wilmer CEO.

On U.S. exchanges 10.05 billion shares changed hands compared with the 11.04 billion moving average for the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a 2.65-to-1 ratio; on Nasdaq, a 2.16-to-1 ratio favored advancers.

The S&P 500 posted 18 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 55 new highs and 97 new lows.

(Reporting by Sinéad Carew in New York, Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Maju Samuel, Pooja Desai and David Gregorio)

By Jeffrey Dastin, Anna Tong, Samrhitha A and Krystal Hu

(Reuters) -The board of the company behind ChatGPT late on Friday fired OpenAI CEO Sam Altman – to many, the human face of generative AI – sending shock waves across the tech industry.

OpenAI’s Chief Technology Officer Mira Murati will serve as interim CEO, the company said, adding that it will conduct a formal search for a permanent CEO.

The announcement blindsided many employees who discovered the abrupt management shuffle from an internal announcement and the company’s public facing blog.

“Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities,” OpenAI said in the blog without elaborating.

Backed by billions of dollars from Microsoft, OpenAI kicked off the generative AI craze last November by releasing its ChatGPT chatbot, which became one of the world’s fastest-growing software applications.

Trained on reams of data, generative AI can create brand-new human-like content, helping users spin up term papers, complete science homework and even write entire novels. After ChatGPT’s launch, regulators scrambled to catch up: the European Union revised its AI Act undefined and the U.S. kicked off AI regulation efforts.

Altman, who ran Y Combinator, is a serial entrepreneur and investor. He was the face of OpenAI and the wildly popular generative AI technology as he toured the world this year.

Altman posted on X shortly after OpenAI published its blog: “i loved my time at openai. it was transformative for me personally, and hopefully the world a little bit. most of all i loved working with such talented people. will have more to say about what’s next later.”

Altman did not return requests for comment. OpenAI was not reachable for further comment.

Murati, who has worked for Tesla previously, joined OpenAI in 2018 and later became the company’s chief technology officer. She oversaw products launches including ChatGPT.

At an emergency all-hands meeting on Friday afternoon after the announcement, Murati sought to calm employees and said OpenAI’s partnership with Microsoft is stable and its backer’s executives, including CEO Satya Nadella, continue to express confidence in the startup, a person familiar with the matter told Reuters.

The Information previously reported details of the meeting.

“Microsoft remains committed to Mira and their team as we bring this next era of AI to our customers,” a spokesperson for the software maker told Reuters on Friday.

In a statement published on Microsoft’s website Nadella added: “We have a long-term agreement with OpenAI …  Together, we will continue to deliver the meaningful benefits of this technology to the world.”

EARTHQUAKE

Well wishers and critics piled onto digital forums as the news spread.

On X, former Google CEO Eric Schmidt called Altman “a hero of mine,” adding “He built a company from nothing to $90 Billion in value, and changed our collective world forever. I can’t wait to see what he does next. I, and billions of people, will benefit from his future work- it’s going to be simply incredible.”

“This is a shocker and Altman was a key ingredient in the recipe for success of OpenAI,” Daniel Ives, analyst at Wedbush Securities said. “That said, we believe Microsoft and Nadella will exert more control at OpenAI going forward with Altman gone.”

The full impact of the OpenAI surprise will unfold over time, but its fundraising prospects were an immediate concern. Altman was considered a master fundraiser who managed to negotiate billions of dollars in investment from Microsoft as well as having led the company’s tender offer transactions this year that fueled OpenAI’s valuation from $29 billion to over $80 billion.

“In the short term it will impair OpenAI’s ability to raise more capital. In the intermediate term it will be a non-issue,” said Thomas Hayes, chairman at hedge fund Great Hill Capital.

Other analysts said Altman’s departure, while disruptive, would not derail generative AI’s popularity or OpenAI or Microsoft’s competitive advantage.

“The innovation created by OpenAI is bigger than any one or two people, and there is no reason to think this would cause OpenAI to cede its leadership position,” said D.A. Davidson analyst Gil Luria. “If nothing else, Microsoft’s stake and significant interest in OpenAI’s progress ensure the appropriate leadership changes are being implemented.”

As late as Thursday evening, Altman showed no signs of concern at two public events. He joined colleagues in a panel on the sidelines of the Asia-Pacific Economic Cooperation (APEC) conference in San Francisco, describing his commitment and vision for AI.

Later he spoke at a Burning Man-related event in Oakland, California, engaging in an hour-long conversation on the topic of art and AI. Altman seemed relaxed and gave no indication anything was wrong, but left right after his talk was over at 7:30 p.m.

The event organizer said at the event that Altman had another meeting to attend.

(Reporting by Samrhitha Arunasalam in Bengaluru, Jeffrey Dastin and Anna Tong in San Francisco, and Krystal Hu in New York; Editing by Shounak Dasgupta, Kenneth Li and Richard Chang)

(Reuters) – Lions Gate Entertainment has suspended advertising on Elon Musk-owned X, a spokesperson for the company said on Friday.

Apple is also pausing all advertising on X, Axios reported, after Musk backed an antisemitic post on the social media platform earlier this week.

(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Devika Syamnath)

By Jeffrey Dastin, Anna Tong, Samrhitha A and Krystal Hu

(Reuters) -ChatGPT maker OpenAI’s CEO Sam Altman has been ousted after the board lost confidence in his ability to lead, the company said on Friday, sending shock waves across the tech industry.

OpenAI’s Chief Technology Officer Mira Murati will serve as interim CEO, the company said, adding that it will conduct a formal search for a permanent CEO.

The announcement blindsided many employees who discovered the abrupt management shuffle from an internal announcement and the company’s public facing blog.

“Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities,” OpenAI said in the blog without elaborating.

Backed by billions of dollars from Microsoft, OpenAI kicked off the generative AI craze last November by releasing its ChatGPT chatbot, which became one of the world’s fastest-growing software applications.

Altman, who ran Y Combinator, is a serial entrepreneur and investor, was the face of OpenAI and the wildly popular generative AI technology that can churn out human-like responses to queries as he toured the world this year. 

Altman did not return requests for comment. OpenAI was not reachable for further comment.

“Microsoft remains committed to Mira and their team as we bring this next era of AI to our customers,” a spokesperson for the software maker told Reuters on Friday.

While the impact of the change at OpenAI was not immediately clear, current fundraising prospects could be challenged. “In the short term it will impair OpenAI’s ability to raise more capital. In the intermediate term it will be a non-issue,” Thomas Hayes, chairman at hedge fund Great Hill Capital, said.

(Reporting by Samrhitha Arunasalam in Bengaluru, Jeffrey Dastin and Anna Tong in San Francisco, and Krystal Hu in New York; Editing by Shounak Dasgupta, Kenneth Li and Richard Chang)

By Sinéad Carew and Shristi Achar A

(Reuters) – Wall Street’s three major indexes edged up slightly on Friday as investors digested recent gains while remarks from Federal Reserve officials clouded the outlook about when the U.S. central bank might start cutting interest rates.

Vice Chair for Supervision Michael Barr said he believes the Fed is at or near the peak of interest rate hikes, but San Francisco Fed chief Mary Daly and Boston Fed President Susan Collins highlighted the need for more evidence of cooling inflation.

Adding pressure, shares of Applied Materials fell 4% after its third-quarter report and news the U.S. Justice Department is investigating allegations that the semiconductor equipment maker violated export curbs to China.

Offering equities some support was a decline in the 10-year Treasury note yield, which touched a roughly two-month low during the session.

The S&P 500, the Nasdaq and the Dow registered their third straight week of gains. For the S&P and the Dow it was the longest weekly winning streak since July. For the Nasdaq it would be the longest weekly advance since June.

“The biggest catalyst for stocks today is that we hit a two month low in Treasury yields,” said Robert Phipps, director at Per Stirling in Austin Texas.

While the major indexes had a muted session, Per Stirling’s Phipps pointed to strength in more cyclical sectors.

“Because tech stocks are weak today the S&P 500 is hiding strength in other areas of the market,” he said, pointing to gains in energy, industrial and financial sectors.

The Dow Jones Industrial Average rose 1.81 points, or 0.01%, to 34,947.28, the S&P 500 gained 5.78 points, or 0.13%, to 4,514.02 and the Nasdaq Composite added 11.81 points, or 0.08%, to 14,125.48.

For the week, the S&P 500 added 2.2% while the Nasdaq composite rose 2.4% and the Dow climbed 1.9%.

“We’ve come a long way. We need to digest some of these moves and look for what the next catalyst is. Earnings is behind us. The Fed is on hold and is going to be in December. The equity market is looking for guidance,” said Jack McIntyre, portfolio manager at Brandywine Global in Philadelphia.

Energy, finishing up 2.1%, was the biggest percentage gainer among the 11 major S&P 500 sectors as oil prices settled up more than 4%. [O/R]

The communication services index was the biggest percentage loser as heavyweight Alphabet fell more than 1%. Technology, the second weakest sector was dragged down by Microsoft, which fell 1.7%.

ChatGPT maker OpenAI, which is backed by Microsoft, said on Friday that its Chief Executive Officer would leave after the board said he was “not consistently candid in his communications”.

Countering its megacap peers, Amazon.com gained 1.6%. The online retailer announced it is trimming jobs at its Alexa voice assistant unit, citing shifting business priorities and a greater focus on generative artificial intelligence.

The small-cap Russell 2000 index rallied 1.4% on the day, outperforming broader markets. The index, whose members benefit more than larger cap companies from easing of lending rates, also outperformed for the week, adding 5.4%.

Retail stocks were in demand with Ross Stores rallying 7.2%. The company, which sells off-price clothing and home products, raised its annual earnings forecast after topping third-quarter sales and profit expectations.

Also Gap shares surged 30.6% as the apparel retailer posted better-than-expected third-quarter results due to improving sales at Old Navy and easing supply expenses.

ChargePoint Holdings shares slumped 35.5% as the electric-vehicle charging network provider lowered estimates for third-quarter revenue. It also named Rick Wilmer CEO.

On U.S. exchanges 10.05 billion shares changed hands compared with the 11.04 billion moving average for the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a 2.65-to-1 ratio; on Nasdaq, a 2.16-to-1 ratio favored advancers.

The S&P 500 posted 18 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 55 new highs and 97 new lows.

(Reporting by Sinéad Carew in New York, Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Maju Samuel, Pooja Desai and David Gregorio)

(Reuters) -ChatGPT maker OpenAI said on Friday Sam Altman will depart as the company’s chief executive officer after the board found he was “not consistently candid in his communications”.

OpenAI’s Chief Technology Officer Mira Murati will serve as interim CEO, the company said, adding that it will conduct a formal search for a permanent CEO.

“Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities,” according to OpenAI.

Backed by billions of dollars from Microsoft, OpenAI kicked off the generative AI craze last November by releasing its ChatGPT chatbot, which became one of the world’s fastest-growing applications.

Altman was not immediately available for comment, while Microsoft did not immediately respond to a request for comment.

Shares of Microsoft, which has a stake in OpenAI, were down 1.91% at $368.93.

Trained on reams of data, generative AI can create brand-new humanlike content, helping users spin up term papers, complete science homework and even write entire novels.

(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Shounak Dasgupta)

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – A string of hefty bets on a doubling of Wall Street’s best known volatility index is raising eyebrows in the U.S. equity options markets, though analysts say they are probably not wagers on a market crash.

Some 100,000 January call options on the Cboe Volatility Index changed hands on Friday, with a strike price of 27. That is nearly twice the current level of the VIX, which has fallen close to a two-month low of 13.69 following a rally that has seen the S&P 500 advance to within 2% of its year high.

Similarly large positions in January VIX options were opened on Wednesday and Thursday. In all, the trader or traders paid about $37 million to buy more than 500,000 VIX January calls.

Past periods when the VIX has doubled within the space of two months have been marked by intense stock market selloffs, such as the COVID-19 market crash of March 2020 and the selloff in March 2018.

The recent large trades, however, are more likely hedges on a portfolio of stocks, rather than wagers on a massive equity selloff, options strategists said.

“By definition this is a disaster hedge but I don’t think it’s someone who is expecting the VIX to double … there are other trades to do if you are expecting the VIX to explode,” Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group. “This could even be a big macro fund adding long exposure and in order to add long exposure they need to have more of a hedge on,” Murphy said.

The trades are unusually large and make up about 5% of this month’s overall trading volume in VIX options, according to Trade Alert data.

The recent surge in stock prices on growing investor conviction that the Federal Reserve is done hiking interest rates has crushed volatility levels, making the price of options hedges relatively attractive. “Realized volatility has come crashing in and the market has been one way … on paper, these calls look fantastic,” said Matthew Tym, head of equity derivatives trading at Cantor Fitzgerald. Tym cautioned that with volatility spikes few and far between, these types of positions have done poorly this year.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili)

(Reuters) – Lions Gate Entertainment has suspended advertising on Elon Musk-owned X, a spokesperson for the company said on Friday.

Apple is also pausing all advertising on X, Axios reported, after Musk backed an antisemitic post on the social media platform earlier this week.

(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Devika Syamnath)

By Davide Barbuscia

NEW YORK (Reuters) – Rising U.S. government debt and fiscal deficits that have helped lift government bond yields this year will likely become secondary factors for investors, as their focus shifts to economic fundamentals, Citi analysts said.

Concerns over increased government bond supply and larger fiscal deficits contributed to a surge in government bond yields – which move inversely to prices – to 16-year highs this year, while pushing rating agencies Fitch and Moody’s to turn negative on U.S. government creditworthiness.

Even though those challenges are unlikely to recede, investors will eventually grow accustomed to the risks, partly because of lack of alternatives given the U.S. dollar’s status of global reserve currency and the depth and liquidity of the U.S. government bond market, said Nathan Sheets, global chief economist at Citi.

“The dollar and Treasuries are the reserve assets … in some sense investors don’t have a lot of other options, and this makes us think the most likely scenario is that these risks recede in the background,” said Sheets.

“Our baseline is that over time investors accept these fiscal risks as a fact of life and that ultimately it is not supply and demand that determine Treasury yields but it’s more about the fundamentals of the economy,” he said.

The nonpartisan Congressional Budget Office (CBO) has estimated that cumulative budget deficits will total about $20 trillion in the coming decade. Moody’s, which last week lowered its outlook on U.S. credit, expects the government to continue to run wide fiscal deficits due to increased spending and higher debt interest payments.

Meanwhile, investors have in recent months sounded alarm bells on the U.S. fiscal position. Hedge fund Bridgewater Associates’ Ray Dalio expects a U.S. debt crisis. “As we look forward we have a debt problem, because you can’t keep adding to debt faster than you add to income,” he told CNBC on Friday.

Treasury yields, however, have retrenched in recent weeks on expectations that the Federal Reserve has reached a peak in its interest-rate hiking cycle, and as the Treasury announced a more modest year-end schedule of Treasury debt sales.

Some Fed officials have also said rising bond yields, which make access to credit more expensive, could be a substitute for increasing interest rates further.

“The fact that authorities have to respond to this is potentially how we see the lifecycle of any crisis playing out in the U.S. moving forward,” said Jabaz Mathai, head of G10 rates strategy at Citi.

Where authorities have less influence, however, is on the demand side. As the Federal Reserve keeps reducing its bond holdings as it seeks to curb inflation, price-sensitive private investors have to pick up the slack.

“There is going to be an extraction of higher yields from these investors,” cautioned Mathai.

(Reporting by Davide Barbuscia; Editing by Ira Iosebashvili and Diane Craft)