Category: Commodities

  • NY Session Tactical Brief – Wednesday, 6 May

    Regime: Risk-on, fuelled by falling US yields and hopes of de-escalation in the Middle East; VIX is elevated but failing to hold gains.

    Today’s market themes:

    • Geopolitical relief rally: Equities and gold gain on reports of a potential US-Iran deal, sending oil sharply lower.
    • Dovish ECB spillovers: European yields are sharply lower after ECB commentary and stable wage data, supporting European equities.
    • Crowded short squeeze: Risk assets supported by potential short squeeze with CFTC data showing traders are heavily short JPY and Nasdaq.

    The setup: Oil’s sharp decline is the key driver today, prompting a rotation into risk assets, and supporting gold. The trade is to fade the rally in gold as real yields remain positive. Key risk is a breakdown in the US-Iran deal, which would send oil prices sharply higher again and reverse the risk-on tone.

    Watch list (native time per event):

    • 08:15 ET USD: ADP Non-Farm Employment Change (118K vs 62K)
    • 10:00 ET CAD: Ivey PMI (49.9 vs 49.7)
    • 16:15 ET CAD: BOC Gov Macklem Speaks

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): US data will be crucial in determining the next direction.
      • Cross: Risk sentiment and falling US yields are weighing.
      • Levels: Support at 97.50, resistance at 98.00.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): Lower Bund yields are supporting as ECB turns dovish.
      • Cross: Weaker DXY and positive risk sentiment are supportive.
      • Levels: Support at 1.1700, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness and risk appetite are key drivers.
      • Levels: Support at 1.3550, resistance at 1.3650.
    • USD/JPY:
      • Direction: Down
      • Domestic (JP): Intervention risk remains, limiting JPY weakness.
      • Cross: Falling US 10Y yields and a weaker DXY are pressuring.
      • Levels: Support at 155.00, resistance at 157.00.
    • USD/CAD (Loonie):
      • Direction: Neutral
      • Domestic (CA): BoC speakers watch to see if rate cuts are coming.
      • Cross: USD weakness offset by lower WTI, US-CA 10Y stable.
      • Levels: Support at 1.3580, resistance at 1.3650.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: Copper price rise and DXY weakness, China growth hopes aiding.
      • Levels: Support at 0.7200, resistance at 0.7280.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): RBNZ speakers in focus, impact on kiwi to be assessed.
      • Cross: DXY weakness and risk-on, limited by US yield impact.
      • Levels: Support at 0.5900, resistance at 0.6000.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness and haven demand waning.
      • Levels: Support at 0.7770, resistance at 0.7830.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed
      • Domestic: Relative CB divergence is a driver today.
      • Cross: EUR/GBP ranges. JPY shorts are exposed.
      • Levels: Monitor key levels from overnight session.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Hopes for de-escalation are driving.
      • Cross: Weaker DXY, fading risk-off, positive momentum.
      • Levels: Support at 4650, resistance at 4700.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): No fresh domestic catalyst — sensitive to US response.
      • Cross: Follows Gold’s trend, industrial demand boost.
      • Levels: Support at 7600, resistance at 7800.
    • WTI / Brent:
      • Direction: Down
      • Domestic (asset-specific): Deal chatter is main driver.
      • Cross: Weaker DXY isn’t sufficient to lift with Iran headlines.
      • Levels: Support at 90, resistance at 100.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): No fresh domestic catalyst — sensitive to US response.
      • Cross: Aided by optimism.
      • Levels: Support at 610, resistance at 620.
    • SPX:
      • Direction: Up
      • Domestic (US): Boosted sentiment supports outlook.
      • Cross: VIX regime shift, global risk-on fueling.
      • Levels: Futures 7300, cash support at 7250, resistance at 7350.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap resilience and lower rates helpful.
      • Cross: Rate sensitivity supporting.
      • Levels: Monitor intraday resistance and support levels.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Broader market lift aids cyclicals.
      • Cross: Lower yields benefit outlook.
      • Levels: Monitor intraday resistance and support levels.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Riding the positive global wave, GBP drag offset.
      • Levels: Monitor intraday resistance and support levels.
    • DAX:
      • Direction: Up
      • Domestic (DE): Lower Bund yields, EU tone aiding DAX.
      • Cross: Taking cues from US tech.
      • Levels: Monitor intraday resistance and support levels.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY weakness and earnings are important.
      • Cross: Risk tone and US tech performance play a key role.
      • Levels: Monitor intraday resistance and support levels.
    • BTC:
      • Direction: Up
      • Domestic (asset-specific): ETF flow stable, and funding rate stable.
      • Cross: Risk sentiment.
      • Levels: Support at 81000, resistance at 83000.

    Positioning watch: JPY is the most crowded short (0th percentile) and Aussie is most crowded long (96th percentile), per CFTC. A dovish surprise from the Fed or a hawkish BoJ shift could trigger a significant squeeze in JPY.

    The pain trade: A surprisingly strong ADP print would reignite inflation concerns and send yields higher, triggering a sharp reversal of today’s risk-on move and hurting gold longs.

  • Gold Surges on Mideast Ceasefire Hopes – Wednesday, 6 May

    Where we are: Gold (COMEX) is trading at 4689.9, up 126.6 or 2.77% on the day, fueled by hopes of de-escalation in the Middle East. Overnight, bullion traded in a wide range between 4556.1 and 4733.9. This rally marks a significant recovery from recent selling pressure, pushing it well above yesterday’s close.

    What’s driving it: A fragile ceasefire in the Gulf is the primary driver, diminishing fears of further energy-price inflation that had reinforced expectations for tighter monetary policy. The prospect of a US-Iran deal, potentially involving sanctions relief and nuclear negotiations, adds to the downward pressure on oil and therefore inflation expectations. This is amplified by a weaker dollar, as the DXY slides to 97.79. Rising real yields had presented a headwind for gold, but the current risk-on environment is overpowering that influence.

    • US 10Y real yields rose to 1.95% as of May 4th. This is a headwind, but being outweighed by the risk off move for now.
    • Reuters reported that gold climbed over 3% as Middle East peace hopes drag down dollar, oil.
    • Net non-commercial gold positioning remains modestly long at +159,571 contracts.

    NY session focus: Today’s ADP Non-Farm Employment Change data at 08:15 ET will be closely watched for its impact on US rate expectations, and will affect the current risk-on sentiment if the number is far from the 118K consensus. Key levels to watch are 4700 as an immediate resistance and 4600 as support. The current trade is to ride the bullish momentum, but the risk is a hawkish surprise from the ADP data. The pain trade would be a sudden collapse of ceasefire hopes, reigniting inflation fears and sending gold tumbling.

  • WTI Crude Plummets on US-Iran Deal Speculation – Wednesday, 6 May

    Snapshot: WTI Crude is down sharply at 95.21, a -7.34 decline, driven by speculation of a US-Iran deal that could ease tensions and boost supply. The potential agreement is already weighing on prices, with WTI breaching the $100 level.

    • Watch for a test of the 88.71 intraday low; break there confirms downside momentum.
    • The ADP Non-Farm Employment Change at 08:15 ET could offer a short-term distraction, but geopolitical headlines will likely remain dominant.

    Bias into NY: Bearish, with further downside risk to WTI towards the 88.00 level, as the market prices in a potential easing of supply constraints linked to the US-Iran situation. The weaker DXY at 97.79 is offering little support.

  • Brent Plunges as Iran Deal Hopes Emerge – Wednesday, 6 May

    Snapshot: Brent crude is trading at 103.09, down 4.31% on the session, as reports surface of a potential US-Iran deal to ease tensions. These reports have overshadowed any underlying supply concerns. Watch the 08:15 ET ADP Non-Farm Employment Change for potential directional cues.

    • Key support lies at the overnight low of 96.77.
    • Risk remains that the market has further to price on this de-escalation, with geopolitical risk premia still embedded.

    Bias into NY: Bearish. The market is likely to test lower as traders price in the reduced geopolitical risk, potentially pushing Brent towards the 95.00 handle. DXY weakness is offering only limited offset.

  • NY Session Tactical Brief – Tuesday, 5 May

    Regime: Risk-on, as S&P 500 futures test overnight highs and the VIX remains subdued below 17 despite geopolitical headlines and upcoming data.

    Today’s market themes:

    • RBA Rate Hike: Market anticipating an aggressive RBA hike, driving AUD strength and potential impact across Asia-Pac FX.
    • ISM Services & JOLTS: US economic data to set the tone for the NY session and further solidify Fed policy expectations.
    • Middle East Tensions: Geopolitical risks simmer, with eyes on oil supply disruptions and associated impact on risk sentiment.

    The setup: Focus remains on the RBA rate decision, with expectations leaning towards a 25bp hike to 4.35%. A larger hike or hawkish statement could further boost AUD, while a dovish surprise could lead to a sharp reversal. S&P 500 futures at 7261.75 need to hold to confirm risk-on, failure here triggers sell pressure. Watch US 10Y near 4.42% as a key sentiment indicator.

    Watch list (native time per event):

    • 14:30 AEST AUD: Cash Rate (forecast 4.35%, prior 4.10%)
    • 10:00 ET USD: ISM Services PMI (forecast 53.7, prior 54.0)
    • 10:45 NZT NZD: Employment Change q/q (forecast 0.3%, prior 0.5%)

    Bias by asset:

    • DXY:
      • Direction: Neutral to slightly bullish.
      • Domestic (US): Fed’s data dependence / US data strength / US yields.
      • Cross: Global growth concerns / risk aversion / EUR weakness.
      • Levels: Support 97.80, Resistance 98.50.
    • EUR/USD:
      • Direction: Neutral to bearish.
      • Domestic (EU): ECB policy divergence / moderate Eurozone HICP/ peripheral spreads
      • Cross: DXY strength / US-DE 10Y widening / risk-off flows.
      • Levels: Support 1.1670, Resistance 1.1700.
    • GBP/USD (Cable):
      • Direction: Neutral.
      • Domestic (UK): BoE’s caution / UK CPI near target / Gilt yields steady.
      • Cross: DXY influence / US-UK 10Y / risk appetite.
      • Levels: Support 1.3500, Resistance 1.3575.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ ultra-dovish stance / JGB yields capped / verbal intervention risk.
      • Cross: US 10Y strength / DXY strength / risk-on sentiment.
      • Levels: Support 157.00, Resistance 158.00.
    • USD/CAD (Loonie):
      • Direction: Neutral.
      • Domestic (CA): BoC holding steady / CPI near target / WTI price action.
      • Cross: DXY strength / US-CA 10Y spread.
      • Levels: Support 1.3600, Resistance 1.3650.
    • AUD/USD (Aussie):
      • Direction: Bullish (pre-RBA), then volatile.
      • Domestic (AU): RBA decision / Inflation dynamics / Australia-China relations.
      • Cross: DXY impact / US-AU 10Y / risk.
      • Levels: Support 0.7150, Resistance 0.7200.
    • NZD/USD (Kiwi):
      • Direction: Neutral to bearish.
      • Domestic (NZ): Employment data / RBNZ caution / New Zealand-China trade.
      • Cross: DXY / US-NZ 10Y / risk aversion.
      • Levels: Support 0.5850, Resistance 0.5900.
    • USD/CHF (Swissy):
      • Direction: Neutral.
      • Domestic (CH): SNB policy / Swiss inflation / economic outlook.
      • Cross: DXY direction / safe-haven flows / Europe.
      • Levels: Support 0.7800, Resistance 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Depends on relative CB stance + yields.
      • Domestic: Relative monetary policies and yield differentials are dominant.
      • Cross: DXY / risk sentiment / potential cross-currency feedback loops.
      • Levels: Monitor key technical levels for each cross.
    • XAU (Gold):
      • Direction: Bullish.
      • Domestic (asset-specific): Real yields falling / breakeven inflation firming / CB demand.
      • Cross: DXY weakness / risk-off sentiment.
      • Levels: Support 4520, Resistance 4585.
    • XAG (Silver):
      • Direction: Bullish.
      • Domestic (asset-specific): Strong industrial demand / inflation hedge narrative.
      • Cross: DXY weakness / risk appetite.
      • Levels: Support 7280, Resistance 7450.
    • WTI / Brent:
      • Direction: Neutral.
      • Domestic (asset-specific): EIA stock data / OPEC supply policy / refining activity.
      • Cross: DXY direction / geopolitical risk premium.
      • Levels: WTI support 102.50, resistance 105.50.
    • Copper:
      • Direction: Bullish.
      • Domestic (asset-specific): China stimulus / LME inventory depletion / supply disruption.
      • Cross: Global growth proxy / DXY.
      • Levels: Support 585, Resistance 600.
    • SPX:
      • Direction: Neutral to bullish.
      • Domestic (US): Earnings season / Fed policy / US economic data.
      • Cross: VIX regime / global macro backdrop / US 10Y.
      • Levels: Futures support 7220, resistance 7270; cash S&P support 7170 and 7240.
    • NDX:
      • Direction: Bullish.
      • Domestic (US): Mega-cap tech performance / AI enthusiasm / rising rates-priced-in.
      • Cross: Rate sensitivity / VIX level.
      • Levels: Support at 27730, Resistance at 28000.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): industrial sector earnings / cyclical names / banks.
      • Cross: Bond-yield impact / recession fears.
      • Levels: Support 49050, Resistance 49300.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): Sterling strength / Commodity prices (energy).
      • Cross: Global Risk Appetite.
      • Levels: Support 22420, Resistance 22600.
    • DAX:
      • Direction: Bullish.
      • Domestic (DE): Eurozone recovery / German data / Bund yields.
      • Cross: US Tech Momentum / DXY / Risk appetite.
      • Levels: Support 23990, Resistance 24400.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY weakness benefit / earnings performance.
      • Cross: US tech sentiment / risk appetite.
      • Levels: Support 59250, Resistance 59700.
    • BTC:
      • Direction: Neutral to bullish.
      • Domestic (asset-specific): ETF flows / on-chain activity / regulations.
      • Cross: DXY influence / risk sentiment / Nasdaq correlation.
      • Levels: Support 79750, Resistance 81300.

    Positioning watch: The Yen and Nasdaq remain crowded shorts (squeeze on positive surprise), while AUD, Copper, and Bitcoin are crowded longs (squeeze on disappointment). CFTC data shows extreme positioning, making these assets vulnerable to outsized moves on data releases.

    The pain trade: A hawkish surprise from the RBA, combined with a soft US ISM, would trigger a sharp AUD rally while simultaneously pressuring USD shorts, creating a significant “double squeeze” scenario.

  • Gold Gains Traction as Real Yields Slide – Tuesday, 5 May

    Where we are: Gold is currently trading at 4573.8, up 0.90% on the session, finding support after yesterday’s dip. The intraday range has been relatively wide, from 4522.9 to 4585.0, suggesting continued volatility. This price action puts it well above yesterday’s close and near the high of the session.

    What’s driving it: The primary driver behind gold’s upward momentum is the continued decline in US real yields. The 10-year TIPS yield has fallen to 1.91%, reinforcing gold’s appeal as a store of value. This move has been amplified by relatively rangebound DXY. The high-impact ISM Services PMI (10:00 ET) data release today will likely dictate the short-term trajectory, as better-than-expected figures could easily revive hawkish expectations and put pressure on bullion; the converse is also true. The market is still pricing considerable uncertainty around the Fed’s forward path.

    • US 10Y Real Yield dropped to 1.91%, strengthening the non-yielding appeal of Gold.
    • 10Y Breakeven Inflation at 2.5%, suggesting some confidence in inflation expectations and supporting gold’s safe-haven status.
    • Net non-commercial positioning in Gold is modestly long at the 4th percentile, meaning there isn’t a considerable amount of speculative froth to be unwound.

    NY session focus: Traders will be closely watching the 10:00 ET releases of the ISM Services PMI and JOLTS Job Openings for directional cues, with New Home Sales data providing additional color. A break above 4585.0 could open the door to further gains, while a move below 4522.9 could signal a retest of lower levels. The working trade remains buying dips on real-yield weakness. A hawkish surprise in today’s data could quickly put this trade at risk. The pain trade for gold is a strong dollar on the back of resurgent US economic data.

  • Oil Slides on Risk-Off; Hormuz Tensions Simmer – Tuesday, 5 May

    Snapshot: WTI crude trades at $103.31, down 1.89% on the session, reversing yesterday’s gains as broader risk sentiment sours. The focus remains on supply risks emanating from the Middle East despite the headlines of a Canada-US pipeline nearing completion. Watch for the 10:00 ET release of ISM Services PMI and JOLTS data for further directional cues.

    • Initial support at $102.60, yesterday’s low.
    • Geopolitical risks surrounding the Strait of Hormuz remain elevated, contributing to price volatility, particularly given the news flow regarding intercepted missiles and attacks on tankers.

    Bias into NY: Downside favored as the stronger DXY at 98.26 and weaker risk appetite weigh on crude. A break below $102.60 opens a path towards $100.

  • North Sea Oil Slides as Mideast Risk Discounted – Tuesday, 5 May

    Snapshot: Brent Crude is currently trading at $112.10, down 1.52% on the session, after the prior day’s 4.4% surge. Investors appear to be discounting heightened geopolitical risk despite reported US-Iran clashes and attacks on UAE oil infrastructure. Focus shifts to the 10:00 ET US data dump: ISM Services PMI, JOLTS, and New Home Sales.

    • Immediate resistance sits at $114.43 (day high), break below $111.39 (day low) would signal further downside.
    • Watch for potential flare-ups in the Strait of Hormuz, particularly given shipowners’ ongoing security concerns; any significant escalation would quickly reverse this dip.

    Bias into NY: Short-term bearish as markets reassess the risk premium, targeting $110, but any surprises in the 10:00 ET data could easily trigger a whipsaw. The DXY strength to 98.26 provides a modest headwind but is very much secondary to the shifting geopolitical narrative.

  • 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.