Spotlight back on Nvidia

If the euro supplants the dollar as the world's main reserve currency, Europe might lose some currency competitiveness - but the related capital flows it's seeking more than compensate.

European Central Bank President Christine Lagarde weighed in on the debate about the euro's global reserve status on Tuesday by reiterating the ECB's long-standing aim to boost the currency's wider use and position it as the logical alternative to the dollar.

The euro has long been the clear second choice in reserve usage, both in the positive and negative sense. While its share of overall reserve coffers is still far behind the dollar's, the euro is way ahead of any other serious rivals to the greenback bar gold.

But what was eye-catching about the very vocal ECB support for wider euro usage was the timing and thrust. 

Lagarde's statements come amid fresh doubts about the dollar's haven status, the U.S. economy's role in the world at large and America's fraying geopolitical alliances - as well as the Trump administration's perceived desire for a weaker, more competitive exchange rate.

And Lagarde's speech clearly framed U.S. difficulty as Europe's opportunity.

After noting that the dollar and U.S. financial markets had been effective global anchors for decades, she added that "when doubts emerge about the stability of the legal and institutional framework, the impact on currency use is undeniable."

"These doubts have materialised in the form of highly unusual cross-asset correlations since April 2 this year, with the U.S. dollar and U.S. Treasuries experiencing sell-offs even as equities fell," the ECB chief explained, referring to market ructions after U.S. President Donald Trump's 'reciprocal tariff' gambit last month.

"The EU has a legitimate reason to turn its commitment to predictable policymaking and the rule of law into a comparative advantage," Lagarde added, underscoring the need for political and internal capital market reforms in the EU that would enable the bloc to seize this opportunity.

Graphics are produced by Reuters.

Clearest of all was her plea for joint debt issuance to boost the scale of 'safe' euro assets, a move that is still controversial within Europe due to persistent German pushback.  

"Economic logic tells us that public goods need to be jointly financed," she said, re-upping the ECB's preference for expanding the pool of jointly issued euro assets.

And she also pointedly underlined the attraction of Europe's military rearmament to official investors who "seek geopolitical assurance in another form: they invest in the assets of regions that are reliable security partners and can honour alliances with hard power."

Graphics are produced by Reuters.

'Nvidia day' has become a moment of great excitement for markets in recent years, as the AI darling's stellar earnings and stock gains have typically impressed Wall Street. But investors are approaching today's announcement with caution.

That's because President Donald Trump's administration, in a fresh effort to limit Beijing's access to cutting-edge technology, last month put export limits on Nvidia's H20 chip, a move the company said would result in $5.5 billion in charges. While the company is expected to report first-quarter revenue surged an annual 66.2% to $43.28 billion, analysts put the quarterly revenue hit ahead from the China chip curbs at anywhere from $3-$4.5 billion.

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