Category: Commodities

  • NY Session Tactical Brief – Monday, 4 May

    Regime: Risk-off, with escalating Middle East tensions driving haven demand and weighing on equities; VIX at 16.89.

    Today’s market themes:

    • Geopolitical risk: Oil spike and risk-off sentiment due to heightened tensions in the Strait of Hormuz.
    • USD strength: Continued consolidation after recent gains, influenced by yield differentials and risk aversion.
    • ECB policy divergence: ECB hints at rate hikes clash with dovish undertones from BoJ and others.

    The setup: The spike in oil prices driven by Mideast tensions is fueling inflation fears and pressuring risk assets. Traders are pricing in a potential hawkish response from central banks, particularly the ECB, exacerbating the downside pressure on equities. Watch for further escalation in the Middle East, with a risk of a deeper equity sell-off if oil breaches $105 and 10Y yields rise further.

    Watch list (native time per event):

    • 15:30 ET CAD: BOC Gov Macklem Speaks

    Bias by asset:

    • DXY:
      • Direction: Neutral to bullish
      • Domestic (US): Fed on hold / Yield consolidation
      • Cross: Safe-haven flows / Global risk aversion
      • Levels: Support 118.50 / Resistance 119.00
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): ECB rate hike expectation / slow growth
      • Cross: DXY strength / Risk-off flows
      • Levels: 1.1650 / 1.1750
    • GBP/USD (Cable):
      • Direction: Neutral to bearish
      • Domestic (UK): BoE cautious / Data dependent
      • Cross: DXY strength / risk aversion
      • Levels: 1.3550 / 1.3650
    • USD/JPY:
      • Direction: Bullish, but with intervention risk
      • Domestic (JP): BoJ dovish / Yield curve control
      • Cross: US 10Y strength / Risk-off buying USD
      • Levels: 157.00 / 158.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC cautious / WTI boost limited
      • Cross: DXY strength / US growth advantage
      • Levels: 1.3650 / 1.3700
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA dovish / Rate cut odds rise
      • Cross: DXY strength / China weakness / Risk-off
      • Levels: 0.7150 / 0.7250
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ dovish stance continues
      • Cross: DXY strength / Risk aversion
      • Levels: 0.5850 / 0.5950
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB easing / Yield disadvantage
      • Cross: Safe-haven unwind / DXY strength
      • Levels: 0.7800 / 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral, Neutral, Bullish
      • Domestic: Relative CB stance + yields
      • Cross: DXY / Risk / cross-of-crosses dynamics
      • Levels: 0.8500-0.8600 / 170.00-171.00 / 192.00-193.00
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields / Reduced haven demand
      • Cross: DXY strength / Risk-off waning
      • Levels: 4500 / 4550
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Industrial demand lackluster
      • Cross: DXY strength / Risk-off waning
      • Levels: Lower toward 47
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Hormuz disruption / OPEC restraint
      • Cross: DXY influence / Risk regime
      • Levels: 100 / 105
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China stimulus needs affirmation
      • Cross: Global growth proxy / DXY
      • Levels: $5.00 / $5.10
    • SPX:
      • Direction: Bearish
      • Domestic (US): Earnings worries / Fed on hold / Rising yields
      • Cross: VIX spike / Geopolitical tension
      • Levels: 5100 / 5150
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yields / Mega-cap scrutiny
      • Cross: Rate sensitivity / VIX
      • Levels: 18250 / 18400
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical concerns / Bond sell-off
      • Cross: Bond-yield impact
      • Levels: 38500 / 39000
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling level / Gilt impact
      • Cross: Global risk / US tone
      • Levels: 10300 / 10400
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Bund pressure / EU outlook dimmed
      • Cross: US tech spillover / DXY
      • Levels: 23800 / 24200
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY rebound limiting gains
      • Cross: US tech / Risk regime
      • Levels: 59000 / 60000
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flow stalling / Funding rate high
      • Cross: DXY impact / Risk regime
      • Levels: $79000 / $81000

    Positioning watch: Dollar, Aussie, Copper and Bitcoin are crowded longs and vulnerable to disappointment; Yen, Kiwi, and Nasdaq are crowded shorts and vulnerable to squeezes. Watch for correlated reversals if headlines shift.

    The pain trade: A de-escalation of Middle East tensions, combined with surprisingly dovish comments from Macklem at 15:30 ET, could trigger a rapid unwinding of oil longs and a short squeeze in risk assets, particularly Nasdaq.

  • Gold Under Pressure from Rising Real Yields – Monday, 4 May

    Where we are: Gold currently trades around $4,540 per ounce, testing its lowest level since late March. Overnight, bullion remained in a narrow range but is showing downside pressure as NY traders prepare to come online. The key level to watch remains the March low around $4,500, a break of which could trigger further selling. The market remains below last week’s close and has struggled to regain momentum.

    What’s driving it: Rising real yields in the US are the primary headwind for Gold. While the 10Y breakeven inflation rate increased 2.0bp to 2.48%, the 10Y Real Yield remains elevated at 1.94%. Middle East jitters have fuelled inflation fears, supporting breakevens, but this hasn’t been enough to offset the impact of rising nominal yields. The modestly long speculative positioning, with net non-commercial holdings at +159,571 contracts, also leaves the market vulnerable to further downside should momentum continue to build.

    • US 10Y Real Yield is at 1.94%, maintaining downward pressure on Gold.
    • Speculator positioning is at the 4th percentile, leaving Gold vulnerable to a potential squeeze.
    • Geopolitical risks in the Middle East are currently being outweighed by broader macro forces.

    NY session focus: Focus will remain on US yields as traders look ahead to upcoming inflation data. Keep an eye on the 10Y yield, as a further push above 4.4% would likely weigh on Gold. Watch for any headlines related to Iran peace talks or the Strait of Hormuz, as these could trigger short-term volatility. The trade that’s working is shorting Gold on rallies towards $4,550, while the trade at risk is holding long positions anticipating a risk-off move. The pain trade for Gold would be a sharp reversal in real yields combined with a renewed wave of safe-haven buying.

  • Oil Volatility Set to Persist on Middle East Tensions – Monday, 4 May

    Snapshot: WTI crude is trading around $102.6 per barrel, up sharply following reports of heightened tensions in the Strait of Hormuz. Although a US official denied reports of a direct attack on a US warship, increased Iranian naval activity is raising concerns. Watch for risk sentiment into the NY open.

    • Geopolitical risk remains elevated; monitor headlines regarding shipping disruptions in the Strait of Hormuz for potential upside catalysts.
    • The moderately long positioning among speculators (75th percentile) introduces squeeze risk if prices break key support levels.

    Bias into NY: Expect choppy trading in US Oil as traders assess the geopolitical risks and the impact on supply chains; $100 remains a key level to watch for support.

  • Brent Crude Bulls Eye $115 as Supply Risks Mount – Monday, 4 May

    Snapshot: Brent is pushing higher, driven by escalating tensions in the Strait of Hormuz and OPEC+ reluctance to ramp up output materially following the UAE’s exit. News wires report Brent is trading around $110 a barrel, near a four-year high. Focus shifts to whether Gov. Macklem’s 15:30 ET remarks offer fresh insight into BoC policy and its impact on commodity demand.

    • Watch for further escalation in the Strait of Hormuz; Trump’s pledge to “free” stranded cargo ships could add fuel to the fire.
    • A break above $112.00 would confirm bullish momentum, while a failure to hold $108 could signal a temporary top.

    Bias into NY: Bullish, with geopolitical risks and limited OPEC+ supply increases supporting prices. We expect Brent to test $112.00, with real yields remaining elevated capping gains short of $115.

  • NY Session Tactical Brief – Friday, 1 May

    Regime: Mixed — VIX is elevated at 18.81, while US 10Y yields are up 6bp on the day, suggesting a grind higher driven by real-rate repricing.

    Today’s market themes:

    • Real-rate repricing: higher yields pressuring risk assets amid sticky inflation data
    • USD/JPY intervention risk: markets remain on high alert after suspected BOJ action yesterday
    • ISM Manufacturing: US data in focus to confirm or deny disinflation narrative

    The setup: With US 10Y yields at 4.42%, the market is testing the upper end of its recent range. The trade is to fade risk assets on rallies, especially tech, given the real-yield headwinds. The risk is a dovish surprise from ISM data, which could lead to a relief rally.

    Watch list (native time per event):

    • 10:00 ET USD: ISM Manufacturing PMI (forecast 53.1, prior 52.7)
    • 10:00 ET USD: ISM Manufacturing Prices (forecast 80.0, prior 78.3)

    Bias by asset:

    STRICT SILO RULE: For every non-USD asset, the Domestic line MUST contain only domestic content (home central bank / domestic data / domestic yield / domestic political-fiscal driver). USD, DXY, Fed, US yields, and risk regime go in the Cross line — never in Domestic. If no fresh domestic catalyst exists, write “No fresh domestic catalyst — sensitive to US response” in Domestic. For commodities, Domestic = real-yields / supply / inventories / flows. For BTC, Domestic = funding / ETF flow / on-chain.

    • DXY:
      • Direction: Bullish
      • Domestic (US): Strong US yields, data dependent Fed
      • Cross: Risk aversion, hawkish repricing
      • Levels: Resistance at 119.00, support at 118.50
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): ECB dovish pivot, sovereign risk
      • Cross: DXY strength, rising US-DE 10Y spread, risk-off flows
      • Levels: Resistance at 1.1750, support at 1.1700
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE relatively hawkish, but growth concerns linger
      • Cross: DXY strength offsets UK yield support
      • Levels: Resistance at 1.3650, support at 1.3580
    • USD/JPY:
      • Direction: Bullish, but cautious
      • Domestic (JP): BoJ still dovish, intervention risk limits upside
      • Cross: US 10Y strength trumps intervention fears
      • Levels: Resistance at 157.00, support at 156.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC cautious, oil link provides limited support
      • Cross: DXY strength, widening US-CA 10Y yield differential
      • Levels: Resistance at 1.3650, support at 1.3580
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA hold weighs, commodity prices mixed
      • Cross: DXY strength, China growth concerns
      • Levels: Resistance at 0.6550, support at 0.6500
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength, risk-off sentiment
      • Levels: Resistance at 0.5950, support at 0.5900
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB easing supports USD/CHF
      • Cross: DXY strength, safe-haven flows
      • Levels: Resistance at 0.7850, support at 0.7750
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish
      • Domestic: ECB dovish vs BoE hawkish, BoJ dovish drives JPY weakness
      • Cross: Risk-off hurts EUR/GBP, risk supports JPY crosses
      • Levels: EUR/GBP: 0.8550-0.8600, EUR/JPY: 170.00-171.00, GBP/JPY: 192.00-193.00
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields undermine gold
      • Cross: DXY strength adds to downward pressure
      • Levels: Resistance at $4,620, support at $4,580
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Industrial demand stable, Gold-Silver ratio favoring Gold
      • Cross: DXY strength, risk-off sentiment
      • Levels: Resistance at $45, support at $44
    • WTI / Brent:
      • Direction: Neutral
      • Domestic (asset-specific): Supply concerns offset by demand worries
      • Cross: DXY strength, risk-off sentiment
      • Levels: WTI: Resistance at $106, support at $104
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth uncertain, LME stocks rising
      • Cross: DXY strength, global growth slowdown
      • Levels: Resistance at $4.50, support at $4.40
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising yields pressure valuations
      • Cross: Elevated VIX, global uncertainty
      • Levels: Futures level 5,290, cash support 5,250, resistance 5,320
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yield impact on valuations, earnings priced in
      • Cross: Rates sensitivity, VIX spike
      • Levels: Resistance at 18,100, support at 18,000
    • US30 (Dow):
      • Direction: Neutral
      • Domestic (US): Industrial and financial earnings mixed
      • Cross: Bond-yield sensitive, could lag
      • Levels: Resistance at 38,900, support at 38,700
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling weakness cushions downside
      • Cross: Global risk-off, US negative lead
      • Levels: Resistance at 10,350, support at 10,300
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Bund yields up, EU growth concerns
      • Cross: US tech weakness, DXY strength
      • Levels: Resistance at 24,500, support at 24,300
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY strength weighs, BOJ stance limits upside
      • Cross: US tech direction, risk sentiment
      • Levels: Resistance at 59,600, support at 59,300
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): Funding rates high, ETF inflows slowing
      • Cross: DXY strength, risk-off sentiment, Nasdaq correlation
      • Levels: Resistance at $61,500, support at $60,000

    Positioning watch: USD, AUD, Copper, and Bitcoin are all crowded longs above the 80th percentile, indicating significant squeeze risk on any negative surprises. JPY and NZD remain crowded shorts, susceptible to a squeeze if data improves or the BOJ hints at tightening.

    The pain trade: A soft ISM print would trigger a relief rally in risk assets, squeezing crowded USD longs and benefiting JPY/NZD shorts.

  • Gold Under Pressure as Real Yields Rise – Friday, 1 May

    Where we are: Gold is trading around $4,605, down from an overnight high of $4,620. Bullion is struggling to maintain its gains from the previous session, facing resistance around the $4,625 level. The price is currently below yesterday’s New York close, reflecting the pressure from rising real yields.

    What’s driving it: Rising US real yields are the primary headwind for Gold. The US 10Y real yield has climbed to 1.96%, a 4.0bp increase since Wednesday, diminishing the appeal of non-yielding assets. While central banks continue to monitor inflation, the ECB press conference yesterday offered no new hawkish signals. The modestly long positioning in Gold futures, with net non-commercial positions at the 25th percentile, doesn’t offer a strong buffer against further yield increases.

    • US 10Y Real Yield (TIPS) rose 4.0bp since Wednesday, increasing the opportunity cost of holding Gold.
    • Net non-commercial positioning in Gold is only modestly long, leaving room for further liquidation if yields continue to climb.
    • The ISM Manufacturing PMI and Prices Paid data at 10:00 ET will be crucial in determining the near-term trajectory of yields and, consequently, Gold.

    NY session focus: All eyes are on the ISM Manufacturing PMI and Prices Paid data due at 10:00 ET. A strong print on both could accelerate the rise in yields and put further pressure on Gold, potentially testing support around $4,580. Conversely, a weaker-than-expected reading could provide a temporary reprieve. The trade at risk is long Gold / short US rates, given the persistent upward pressure on real yields. The pain trade is a significant risk-off move that drives demand for USD and safe haven assets, simultaneously weakening Gold as a commodity, and strengthening it as a hedge.

  • US Oil Primed for Continued Upside – Friday, 1 May

    Snapshot: WTI crude futures hold near $105, underpinned by a lack of progress in US-Iran negotiations, coupled with persistent concerns around global supply. Focus today shifts to the ISM Manufacturing data at 10:00 ET, specifically the Prices Paid component which is expected to show continued inflationary pressure.

    • Failure to break above $106.00 could signal a near-term top.
    • Geopolitical risks remain elevated; any escalation could trigger a sharp rally.

    Bias into NY: Bullish, with a target of $107.00. Tightening supply dynamics, evidenced by record US crude exports, coupled with a moderately long speculative positioning, should keep the pressure on the upside. A strong ISM Manufacturing Prices print at 10:00 ET would likely amplify this move.

  • Brent Crude Sentiment Fragile on Middle East Tensions – Friday, 1 May

    Snapshot: Brent is holding above $111, supported by supply concerns and rising geopolitical tensions. The dominant domestic driver remains the anticipation of the ISM Manufacturing data at 10:00 ET, with the prices component particularly relevant for gauging inflationary pressures and its potential impact on energy demand. Firmer US real yields continue to present a headwind.

    • Watch for a break above $112, which would confirm the bullish momentum.
    • Downside risk stems from a surprisingly weak ISM print, potentially triggering a risk-off move.

    Bias into NY: We expect Brent to remain bid, targeting $113 if the ISM Manufacturing PMI prints above expectations, while a print below 52.7 could see a test of $110. Rising US yields and dollar strength provide a challenging backdrop, but supply-side concerns should prevail.

  • NY Session Tactical Brief – Thursday, 30 April

    Regime: Risk-on, fueled by dovish central bank pivots and a weaker DXY (98.33), as global yields decline.

    Today’s market themes:

    • Dovish repricing of global central bank outlooks, with focus on BoE and ECB.
    • USD weakness amplified by potential intervention risks in USD/JPY, testing multi-decade highs.
    • Geopolitical tensions (US-Iran) continue to underpin commodities volatility.

    The setup: Markets are positioned for lower rates globally, but BoE and ECB decisions are crucial. The trade is to fade USD strength on any hawkish surprises. Risks include stronger US data or escalation of geopolitical tensions. US 10Y at 4.389% and DXY at 98.33 are key levels.

    Watch list (native time per event):

    • 08:30 ET CAD: GDP m/m (forecast 0.2%, prior 0.1%)
    • 12:00 BST GBP: BoE Monetary Policy Report
    • 14:15 CET EUR: Main Refinancing Rate (forecast 2.15%, prior 2.15%)

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): Fed on hold, focusing on inflation; data-dependent bias.
      • Cross: Dovish global CB pivots weighing; intervention watch impacting.
      • Levels: Support at 98.00, resistance at 98.75.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): ECB likely dovish, but watchful of inflation and fragmentation.
      • Cross: Weaker DXY, supporting; focus on US-DE 10Y spread widening.
      • Levels: Support at 1.1650, resistance at 1.1720.
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE holds steady; focus on inflation persistence.
      • Cross: DXY softness helps; US-UK 10Y spread still favoring USD.
      • Levels: Support at 1.3450, resistance at 1.3550.
    • USD/JPY:
      • Direction: Down
      • Domestic (JP): Intervention risk elevated; BoJ still dovish.
      • Cross: US 10Y dropping; risk aversion flows boosting JPY.
      • Levels: Support at 155.50, resistance at 157.50.
    • USD/CAD (Loonie):
      • Direction: Down
      • Domestic (CA): GDP key; BoC cautious; commodity support.
      • Cross: Weaker DXY; US-CA 10Y spread compression.
      • Levels: Support at 1.3645, resistance at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness; Copper prices boosting; China growth hopes.
      • Levels: Support at 0.7100, resistance at 0.7170.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness; risk-on sentiment supporting; squeezed shorts.
      • Levels: Support at 0.5820, resistance at 0.5880.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY drop; safe-haven demand waning; yields declining.
      • Levels: Support at 0.7830, resistance at 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Down; GBP/JPY: Down.
      • Domestic: See individual currency biases for CB divergence.
      • Cross: DXY influence; risk appetite dictating flows.
      • Levels: Watch key support/resistance on the individual crosses.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Real yields still supportive; geopolitical bids strong.
      • Cross: Weaker DXY; safe-haven demand persisting.
      • Levels: Support at 4550, resistance at 4660.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand increasing; Gold-Silver ratio still elevated.
      • Cross: DXY weakness; risk-on tone helping.
      • Levels: Support at 7150, resistance at 7450.
    • WTI / Brent:
      • Direction: Neutral
      • Domestic (asset-specific): Supply concerns remain; EIA inventories in focus.
      • Cross: DXY influence; geopolitical risk premium embedded.
      • Levels: WTI support at 103.00, resistance at 106.00.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China growth hopes remain; LME stocks watched.
      • Cross: Global growth proxy; DXY weakness aiding.
      • Levels: Support at 590, resistance at 605.
    • SPX:
      • Direction: Up
      • Domestic (US): Earnings positive; Fed on hold supporting.
      • Cross: VIX subdued; global risk appetite constructive.
      • Levels: Futures support at 7130, resistance at 7220.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap earnings driving gains; real yields remain low.
      • Cross: Rates sensitivity still relevant; VIX relatively calm.
      • Levels: Support at 27200, resistance at 27700.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Cyclical earnings holding up; financial sector performing.
      • Cross: Bond-yield reaction contained; risk-on flowing through.
      • Levels: Support at 48700, resistance at 49500.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk appetite boosting; US tone constructive.
      • Levels: Support at 22100, resistance at 22500.
    • DAX:
      • Direction: Up
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech strength helpful; DXY weighing less; risk regime strong.
      • Levels: Support at 23700, resistance at 24200.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech providing support; risk appetite generally good.
      • Levels: Support at 58900, resistance at 59500.
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flows stable; funding rates watched.
      • Cross: DXY weakness supporting; Nasdaq correlation remains intact.
      • Levels: Support at 75000, resistance at 77000.

    Positioning watch: JPY remains the most crowded short (0%ile), making it vulnerable to a squeeze on any hawkish BoJ surprise or intervention. Copper, AUD and Bitcoin also hold crowded long positions (>80th percentile), making them vulnerable to sharp selloffs on weaker China data, stronger DXY or a risk-off event.

    The pain trade: A hawkish BoE or ECB surprise would trigger a violent short squeeze in USD/JPY and a broader risk-off move, hammering crowded longs in AUD, Copper and Bitcoin.

  • Gold Surge Fueled by DXY Drop – Thursday, 30 April

    Where we are: Gold (COMEX) is currently trading at 4646.7, up 92.0 points or 2.02% on the day, having traded in a range of 4550.9 to 4658.3. This rally marks a significant rebound from one-month lows and positions the metal well above yesterday’s close. The move is occurring despite a backdrop of rising real yields earlier in the week, suggesting other forces are at play.

    What’s driving it: Gold’s surge appears primarily driven by a weakening dollar, as evidenced by the DXY falling 0.39% to 98.33. The Federal Reserve’s recent FOMC statement likely contributed to the dollar’s decline, as the market interprets the Fed’s signaling of inflation risks as a potential pause in the rate-hike trajectory. This narrative is overriding the headwind from the earlier rise in US 10Y real yields, which stood at 1.92% as of Tuesday. Breakeven inflation is also slightly higher, adding a tailwind.

    • The DXY’s 0.39% drop is providing significant lift to gold, overpowering earlier headwinds.
    • The Fed’s recent FOMC statement on inflation risks is likely capping dollar strength, creating a more favorable environment for gold.
    • Speculator positioning in gold is modestly long, with net non-commercial contracts at +164,006, which is in the 25th percentile. This could limit further upside without fresh buying, though squeeze risk is not pronounced.

    NY session focus: All eyes are on the 08:30 ET data releases, particularly the Advance GDP q/q and Core PCE Price Index m/m figures. Stronger-than-expected GDP (forecast 2.2%) could trigger a hawkish repricing, pressuring gold, while a softer PCE print (forecast 0.3%) could cement the current rally. Key levels to watch are the intraday high of 4658.3 and support around 4550. A clean break above 4658.3 could open the door to further upside. The pain trade for gold is a strong GDP print coupled with hawkish Fedspeak, triggering a sharp rise in real yields and a dollar rally.

  • Oil Slides on Growth Fears – Thursday, 30 April

    Snapshot: WTI crude is trading at $105.37, down 2.75% on the session, driven by concerns surrounding weaker US GDP growth as markets brace for the 08:30 ET data dump. The Fed’s recent FOMC statement offered little in the way of fresh catalysts.

    • Watch for follow-through selling if Advance GDP q/q prints below the 2.2% forecast at 08:30 ET, potentially targeting $103.54.
    • Escalating Iran tensions could trigger a snapback rally, although the “wait-and-see” approach by US oil producers (per FT wires) tempers immediate supply-side responses.

    Bias into NY: Bearish while growth concerns persist; look for a test of $103.50 if GDP disappoints, although a weaker DXY (currently at 98.33) might provide some offset if risk sentiment deteriorates on US data.

  • North Sea Crude Rattles Traders; $110 Key – Thursday, 30 April

    Snapshot: Brent Crude trades at 109.40, down 1.59% on the day, after a volatile overnight session saw prices spike to $126 on US-Iran escalation fears. The subsequent pullback suggests the market is struggling to sustain conflict-premium pricing ahead of 08:30 ET US GDP data.

    • Watch for support around the 107.14 daily low; a break could trigger further downside as conflict premium unwinds.
    • Upside risk remains if the 08:30 ET US GDP print is significantly weaker than the 2.2% forecast, reigniting stagflation fears and supporting oil as an inflation hedge.

    Bias into NY: Cautiously bearish. A retest of daily lows is probable if US data surprises to the upside, with DXY strength adding to the pressure.

  • NY Session Tactical Brief – Wednesday, 29 April

    Regime: Mixed, as lower European equity indices and higher Brent prices offset positive sentiment from Bitcoin and US tech futures; VIX at 18.02.

    Today’s market themes:

    • BoC policy decision and press conference: Expect hawkish guidance from Macklem as inflation remains stubbornly high.
    • Hormuz Strait disruption fears support Oil: Geopolitical risks weigh as Brent hits one-month highs near $109/bbl.
    • USD awaits Fed decision: Dollar consolidating gains ahead of anticipated steady rates.

    The setup: Oil supply fears are currently the dominant driver, pushing Brent to $109. Focus now shifts to how the Fed will address these commodity price pressures at its upcoming meeting, particularly given continued indications that USD is “crowded long”. Rate decision + Powell presser could spur volatility. Watch for a DXY breakout if Powell speaks hawkishly or a sharp reversal if the Fed pivots dovishly on the recent inflation data.

    Watch list (native time per event):

    • 11:30 AEST AUD CPI m/m (forecast 1.3%, prior 0.0%)
    • 09:45 ET CAD BOC Rate Statement (forecast 2.25%, prior 2.25%)
    • 14:00 ET USD Federal Funds Rate (forecast 3.75%, prior 3.75%)

    Bias by asset:

    • DXY:
      • Direction: Neutral, awaiting Fed guidance.
      • Domestic (US): Fed policy decision, US data releases, US yield curve.
      • Cross: Risk sentiment, FX cross flows ahead of tech earnings.
      • Levels: Support 98.40, resistance 98.80.
    • EUR/USD:
      • Direction: Bearish, pressured by DXY strength.
      • Domestic (EU): Sticky Spanish inflation / peripheral spreads.
      • Cross: DXY strength, US-DE 10Y spread favoring USD, risk aversion.
      • Levels: Support 1.1690, resistance 1.1730.
    • GBP/USD (Cable):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, US-UK 10Y spread, risk-off flows.
      • Levels: Support 1.3490, resistance 1.3530.
    • USD/JPY:
      • Direction: Bullish, eyeing 160.
      • Domestic (JP): BoJ dovishness, intervention risk, JGB yields.
      • Cross: Rising US 10Y yield, DXY strength, risk-on flows.
      • Levels: Support 159.50, resistance 160.00.
    • USD/CAD (Loonie):
      • Direction: Neutral.
      • Domestic (CA): Hawkish BoC needed to push higher.
      • Cross: DXY strength, US-CA 10Y spread.
      • Levels: Support 1.3670, resistance 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish, after mixed CPI data.
      • Domestic (AU): Mixed CPI response, RBA watch.
      • Cross: DXY strength, US-AU 10Y spread, China growth concerns.
      • Levels: Support 0.7150, resistance 0.7200.
    • NZD/USD (Kiwi):
      • Direction: Bearish, pressed by the RBNZ’s easing bias.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, US-NZ 10Y spread, risk-off flows.
      • Levels: Support 0.5850, resistance 0.5900.
    • USD/CHF (Swissy):
      • Direction: Bullish, supported by the SNB’s easing bias.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, safe-haven outflows from CHF.
      • Levels: Support 0.7880, resistance 0.7910.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral.
      • Domestic: Relative BoE and ECB stance, relative yields.
      • Cross: DXY strength, risk sentiment.
      • Levels: Monitor key support and resistance.
    • XAU (Gold):
      • Direction: Bearish, pressured by real yields.
      • Domestic (asset-specific): Rising real yields pressuring gold.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 4550, resistance 4630.
    • XAG (Silver):
      • Direction: Bearish, impacted by industrial demand.
      • Domestic (asset-specific): Demand mixed and impacted by real yields.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 7180, resistance 7380.
    • WTI / Brent:
      • Direction: Bullish, supply disruption fears.
      • Domestic (asset-specific): Geopolitical factors driving surge.
      • Cross: Weaker DXY could add fuel to rally, risk on.
      • Levels: WTI support 100.00, Brent support 105.00.
    • Copper:
      • Direction: Neutral, but China key.
      • Domestic (asset-specific): Eyes on China growth, LME stock levels.
      • Cross: Global growth sentiment.
      • Levels: Support 595, resistance 603.
    • SPX:
      • Direction: Sideways, waiting on Fed and earnings.
      • Domestic (US): Eyes on earnings and Fed stance.
      • Cross: VIX regime, global macro.
      • Levels: Futures support 7160, resistance 7190.
    • NDX:
      • Direction: Neutral, focused on mega-cap earnings.
      • Domestic (US): Earnings and AI optimism.
      • Cross: Rates sensitive, watching VIX.
      • Levels: Support 27190, resistance 27320.
    • US30 (Dow):
      • Direction: Neutral, industrials in focus.
      • Domestic (US): Earnings focus and overall US data.
      • Cross: Bond yield reaction.
      • Levels: Support 49200, resistance 49420.
    • UK100 (FTSE):
      • Direction: Bearish, underperforming on Sterling strength.
      • Domestic (UK): Sterling and Gilt yields.
      • Cross: Global sentiment.
      • Levels: Support 22280, resistance 22450.
    • DAX:
      • Direction: Bearish, dragged by German yields.
      • Domestic (DE): German yields and data.
      • Cross: US tech and risk.
      • Levels: Support 23900, resistance 24100.
    • Nikkei:
      • Direction: Bearish, after BoJ inaction.
      • Domestic (JP): JPY levels and JGB yields.
      • Cross: US tech, risk.
      • Levels: Support 59700, resistance 60650.
    • BTC:
      • Direction: Bullish, trending higher.
      • Domestic (asset-specific): ETF flows supportive.
      • Cross: Risk-on environment.
      • Levels: Support 76000, resistance 78000.

    Positioning watch: USD and AUD are crowded longs, while JPY and NZD are crowded shorts. A dovish Fed surprise or positive Japanese data could trigger significant short squeezes in the JPY and NZD.

    The pain trade: A dovish hold from the Fed, coupled with commentary suggesting openness to rate cuts later this year, would trigger a sharp DXY sell-off and a rally in risk assets, catching crowded USD longs off guard.

  • Gold Suffers as Real Yields Climb Ahead of Fed – Wednesday, 29 April

    Where we are: Gold (COMEX) is currently trading at 4557.5, down 52.9 or -1.15% on the day. The intraday range has been 4557.4 to 4624.1, with the price currently near the low of the day. This marks a substantial move lower from yesterday’s close, driven primarily by rising real yields.

    What’s driving it: The primary headwind for gold is the continued ascent in US real yields, with the 10Y TIPS yield rising to 1.91% as of Monday, a further 2.0bp increase. This diminishes gold’s appeal as a safe-haven asset. While breakeven inflation remains stable at 2.44%, the widening gap between nominal yields and inflation expectations pressures bullion. Today’s losses are also compounded by the stronger dollar, as the DXY edges higher to 98.61. The backdrop ahead of the 14:00 ET FOMC decision is one of rising inflation fears fuelled by oil price volatility, evident in the recent Reuters wire noting that “Gold slips as oil prices fuel inflation fears ahead of Fed rate decision”.

    • The US 10Y yield is at 4.371%, a rise of +1.6bp, further diminishing gold’s attractiveness as an alternative investment.
    • The COMEX gold contract has broken key support near 4600, potentially triggering further technical selling.
    • Speculative positioning in gold remains modestly long, with net non-commercial positions at +164,006 contracts, placing it in the 25th percentile. This leaves gold vulnerable to a potential long liquidation if bearish sentiment persists.

    NY session focus: All eyes are on the FOMC today, with the rate decision and statement due at 14:00 ET followed by the press conference at 14:30 ET. Any hawkish signals or indications that the Fed intends to maintain higher rates for longer will likely exert further downward pressure on gold. Key levels to watch are 4550 as initial support, followed by 4500. The trade that is working is shorting gold on rallies, while the trade at risk is holding long positions. The pain trade would be a dovish surprise from the Fed that sends real yields tumbling and ignites a short squeeze in gold.

  • WTI Crude Surges as Middle East Supply Risks Intensify – Wednesday, 29 April

    Snapshot: WTI Crude is up $4.49 to $103.98, driven by escalating concerns over Middle East supply disruptions. The potential for further upside hinges on the outcome of the 14:00 ET FOMC decision and statement.

    • A break above the day’s high of $104.31 would signal further bullish momentum.
    • Increased volatility around the Strait of Hormuz remains a significant risk, with any escalation potentially triggering a sharp price spike.

    Bias into NY: We favour further upside in US Crude targeting $105.00 as long as geopolitical tensions persist; a stronger dollar or hawkish shift from the Fed at 14:00 ET could temper gains.