Category: US30

  • Dow Squeezes to Records on Geopolitical Relief – Tuesday, 16 June

    Where we are: The Dow Jones Industrial Average is consolidating its historic breakout in early London trading, holding firm after Monday’s 350-point surge to fresh record highs. US30 futures are hovering just below yesterday’s closing peak, trading within a tight 120-point overnight range as the market pauses for breath. With European cash indexes posting modest gains, the blue-chip index sits poised to extend its four-day winning streak at the New York open. This consolidation above key structural resistance signals robust underlying demand as shorts are forced to cover.

    What’s driving it: The primary catalyst driving Wall Street’s record run is a rapid recalibration of US inflation expectations ahead of tomorrow’s critical Federal Reserve meeting. US Treasury yields have stabilized, with the 10-year yield resting at 4.48% and the 2-year at 4.09%, which has dramatically eased the discount-rate pressure on cyclical and industrial blue chips. While the Fed is widely expected to hold rates steady, the market is aggressively front-running a softer pro-inflationary outlook following the landmark US-Iran energy agreement to reopen the Strait of Hormuz. This geopolitical de-escalation acts as a powerful domestic tailwind, overriding a minor 1.0bp tick-up in 10-year real yields to 2.17% and driving the VIX down 1.48 points to 16.2 as equity risk premiums compress.

    • The retreat in US 10-year Treasury yields to 4.48% is breathing life back into rate-sensitive Dow giants, ahead of Chairman Warsh’s highly anticipated first meeting tomorrow where monetary framework overhauls are on the table.
    • The impending US-Iran agreement, set to be signed this Friday, has defused intermediate inflation fears by guaranteeing the restoration of Persian Gulf energy exports, allowing the market to look past WTI crude at $95 per barrel.
    • Speculator positioning in Dow futures remains net short at -2,539 contracts (56th percentile of the 52-week range), leaving a significant pool of fuel for a short-covering squeeze as the index hits nominal records.

    NY session focus: The immediate focus for the New York session centers on the upcoming 08:30 ET data releases, where any validation of cooling domestic demand will further fuel this record-breaking rally. Key levels to watch on the US30 are yesterday’s record high of 40,350, which stands as immediate resistance, while structural support has migrated up to the 39,900 handle. The trade that is working is long cyclicals and value-oriented industrials, which are prime beneficiaries of the easing energy crisis, while the trade at risk is chasing the overextended mega-cap tech stocks that are currently seeing capital reallocated away from them. The ultimate pain trade for the desk is a rapid extension of the Dow towards 40,500, forcing the remaining net-short spec positions to capitulate before tomorrow’s FOMC decision.

  • NY Session Tactical Brief – Tuesday, 16 June

    Regime: Risk-on dominance shapes the global session as the US-Iran peace deal suppresses the VIX by 8.4% to 16.2 and softens the DXY to 99.70, overriding a marginal backup in US 10-year yields to 4.48%.

    Today’s market themes:

    • Theme 1: Geopolitical de-escalation triggers massive energy liquidation as Brent collapses below $80.
    • Theme 2: Monetary policy divergence intensifies as BoJ’s underwhelming 25bp hike fails to rescue JPY.
    • Theme 3: Global equity records as DAX clears 25,000 on regional disinflation optimism.

    The setup: The historic US-Iran peace deal has dismantled the geopolitical risk premium in crude, sending WTI crashing 4% to $77.60. This massive risk-on impulse is driving EUR/USD to 1.1600 and Cable to 1.3425, exposing crowded USD longs (81st percentile) to a deeper squeeze. We lean long EUR/USD targeting 1.1680 and short USD/JPY on any return to 160.00 as intervention risks loom large despite the BoJ’s underwhelming 25bp rate hike.

    Watch list (native time per event):

    • 12:19 JST: JPY BOJ Policy Rate (Actual: 1.00% vs 1.00% forecast, 0.75% prior)
    • 14:30 AEST: AUD RBA Cash Rate (Actual: 4.35% vs 4.35% forecast, 4.35% prior)
    • 15:30 JST: JPY BOJ Press Conference (Governor Ueda’s policy outlook and JGB purchase guidance)

    Bias by asset:

    • DXY:
      • Direction: Bearish
      • Domestic (US): Fed hawkishness is challenged by soft PCE expectations; US yields steady.
      • Cross: Geopolitical risk-on from US-Iran peace deal sparks flows into majors.
      • Levels: Support 99.50 / Resistance 100.20
    • EUR/USD:
      • Direction: Bullish
      • Domestic (EU): ECB’s Lane maintains constructive economic path; Eurozone CPI stable at 2.0%.
      • Cross: Softening DXY and narrowing yield spreads lift spot to 1.1600.
      • Levels: Support 1.1540 / Resistance 1.1650
    • GBP/USD (Cable):
      • Direction: Bullish
      • Domestic (UK): BoE 4.50% Bank Rate remains highly restrictive; Gilt yields hold elevated.
      • Cross: Heavy DXY liquidation and global risk-on flow propel spot through 1.3400.
      • Levels: Support 1.3360 / Resistance 1.3450
    • USD/JPY:
      • Direction: Bearish
      • Domestic (JP): BoJ hiked 25bp to 1.00%; MoF intervention threat intensifies above 160.00.
      • Cross: High US 10Y yields keep JPY under pressure despite risk-on.
      • Levels: Support 158.80 / Resistance 160.20
    • USD/CAD (Loonie):
      • Direction: Bearish
      • Domestic (CA): Domestic CPI keeps BoC on hold; oil collapse caps Loonie gains.
      • Cross: Broad DXY selling pressure pushes USD/CAD to test the 1.3910 handle.
      • Levels: Support 1.3880 / Resistance 1.3950
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA paused at 4.35% today, halting its previous three-meeting hiking cycle.
      • Cross: DXY weakness limits downside, but falling copper prices anchor the Aussie.
      • Levels: Support 0.7020 / Resistance 0.7100
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ retains strong dovish easing bias; weak domestic activity weighs heavily.
      • Cross: Soft DXY provides weak support as Kiwi remains the G10 underperformer.
      • Levels: Support 0.5780 / Resistance 0.5850
    • USD/CHF (Swissy):
      • Direction: Bearish
      • Domestic (CH): May producer prices fell 0.4%, cementing SNB’s entrenched disinflationary path.
      • Cross: Soft DXY and safe-haven liquidation drive CHF weakness near 0.7900.
      • Levels: Support 0.7850 / Resistance 0.7950
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bearish / EUR/JPY Bullish / GBP/JPY Bullish
      • Domestic: BoE’s 4.50% yield advantage dominates over ECB easing and glacial BoJ normalisation.
      • Cross: Softening DXY and global risk-on flows amplify cross-rate volatility.
      • Levels: EUR/GBP support 0.8400 / EUR/JPY resistance 186.00 / GBP/JPY support 213.50
    • XAU (Gold):
      • Direction: Bullish
      • Domestic (asset-specific): Real yields at 2.17% provide mild headwinds offset by solid physical buying.
      • Cross: DXY weakness below 100.00 fuels gold’s extension above $4,300.
      • Levels: Support $4,280 / Resistance $4,350
    • XAG (Silver):
      • Direction: Bullish
      • Domestic (asset-specific): Industrial demand expectations improve; Gold-Silver ratio remains elevated around 85.
      • Cross: DXY depreciation and positive global risk tone support industrial metals.
      • Levels: Support $29.50 / Resistance $31.20
    • WTI / Brent:
      • Direction: Bearish
      • Domestic (asset-specific): Expected return of Hormuz flows triggers massive OPEC supply hedge liquidation.
      • Cross: Sharp DXY drop fails to offset massive geopolitical risk premium wipeout.
      • Levels: Brent support $78.50 / WTI support $76.80
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns mount as LME stocks show steady inventory build.
      • Cross: DXY weakness limits downside, but global growth proxy faces squeeze risk.
      • Levels: Support $4.40 / Resistance $4.65
    • SPX:
      • Direction: Bullish
      • Domestic (US): Corporate earnings remain highly robust; Fed rate cut expectations remain stable.
      • Cross: VIX collapse to 16.2 fuels systemic cash inflows ahead of NY.
      • Levels: Futures 5,445 / cash resistance 5,480
    • NDX:
      • Direction: Bullish
      • Domestic (US): Tech digestion continues; massive SpaceX AI valuation expansion boosts Nasdaq futures.
      • Cross: Rising US real yields to 2.17% pose mild duration valuation headwinds.
      • Levels: Support 19,450 / Resistance 19,620
    • US30 (Dow):
      • Direction: Bullish
      • Domestic (US): Industrial recovery and cyclical financial earnings underpin Dow near record highs.
      • Cross: US 10Y yield stability at 4.48% prevents growth-to-value sector rotation.
      • Levels: Support 40,100 / Resistance 40,350
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Strong Sterling above 1.3400 caps exporter earnings; heavy energy weighting drags.
      • Cross: Global risk-on offsets commodity weakness to support UK cash index.
      • Levels: Support 8,120 / Resistance 8,220
    • DAX:
      • Direction: Bullish
      • Domestic (DE): Regional inflation settling at 2.0% fuels conviction in constructive German outlook.
      • Cross: Weak DXY and global risk-on appetite fuel European cash equity inflows.
      • Levels: Support 24,800 / Resistance 25,200
    • Nikkei:
      • Direction: Bullish
      • Domestic (JP): Index shrugged off BoJ rate hike to close at record 69,404.
      • Cross: Global tech resilience and weak JPY export dynamics bolster corporate sentiment.
      • Levels: Support 68,500 / Resistance 69,800
    • BTC:
      • Direction: Bullish
      • Domestic (asset-specific): High positive funding rates and steady ETF inflows support consolidation at $68,400.
      • Cross: DXY weakness and Nasdaq risk-on momentum offset rising global real yields.
      • Levels: Support $67,500 / Resistance $69,500

    Positioning watch: Speculator positioning shows extreme crowding in USD longs (81st percentile), copper longs (92nd percentile), and Bitcoin longs (98th percentile), leaving them vulnerable to sharp liquidation. Conversely, deep net-short positioning in the Japanese Yen (0 percentile) and S&P 500 (6th percentile) presents massive squeeze risks on any positive macro surprises.

    The pain trade: The ultimate pain trade is a violent short squeeze in JPY that forces USD/JPY rapidly back toward 155.00, triggered by physical MoF intervention or hawkish Ueda rhetoric at the press conference this afternoon.

  • NY Session Tactical Brief – Tuesday, 16 June

    Regime: Risk-on but with a clear cyclical tilt, anchored by the VIX sliding 8.37% to 16.2 and the DXY breaking below 100 to trade at 99.70 as real yields hold near 2.17%.

    Today’s market themes:

    • Theme 1: Central bank divergence as BoJ’s surprise 25bp hike to 1.00% contrasts with the RBA’s rate hold at 4.35%.
    • Theme 2: Energy supply shock as Brent plummets below $80/bbl on imminent US-Iran interim deal supply expectations.
    • Theme 3: Eurozone disinflation milestone as HICP hits 2.0%, propelling the DAX past 25,000 before ECB’s Lane speaks.

    The setup: The overnight 25bp BoJ rate hike to 1.00% and the RBA’s hawkish-disappointing hold at 4.35% have created a stark policy divergence that is dominating G10 FX. This occurs as Brent crude plunges below the critical $80.00/bbl handle, heavily dampening global inflation expectations and supporting European equities. We are actively positioned long DAX through the 25,000 milestone ahead of ECB Chief Economist Lane’s speech at 13:10 BST, and we remain sellers of USD/JPY rallies near the pivotal 160.00 handle on heightened intervention risk.

    Watch list (native time per event):

    • 15:30 JST: JPY: BOJ Press Conference (Governor Ueda speaking post-25bp rate hike)
    • 15:30 AEST: AUD: RBA Press Conference (Governor Bullock speaking post-hold at 4.35%)
    • 13:10 BST: EUR: ECB Chief Economist Philip Lane Speech (addressing wage trackers and inflation convergence)

    Bias by asset:

    • DXY:
      • Direction: Bearish bias
      • Domestic (US): Yields ticking higher with 10Y at 4.48% amid resilient economic activity.
      • Cross: Heavy global risk-on flows and surging Cable drag DXY below 99.70.
      • Levels: Support 99.50 / Resistance 100.20
    • EUR/USD:
      • Direction: Bullish bias
      • Domestic (EU): HICP convergence to the 2.0% target supports a steady, controlled ECB easing cycle.
      • Cross: Plummeting DXY and softening US pre-market yields propel EUR/USD toward $1.1600.
      • Levels: Support 1.1520 / Resistance 1.1650
    • GBP/USD (Cable):
      • Direction: Bullish bias
      • Domestic (UK): High relative BoE Bank Rate at 4.50% provides solid yield support.
      • Cross: DXY weakness and crowded short positioning trigger a squeeze through 1.3400.
      • Levels: Support 1.3350 / Resistance 1.3480
    • USD/JPY:
      • Direction: Bearish bias
      • Domestic (JP): BoJ hiked rates 25bp to 1.00%, steepening JGB curve and driving repatriation.
      • Cross: Spread compression vs US 10Y at 4.48% and MoF intervention fears cap upside.
      • Levels: Support 158.50 / Resistance 160.00
    • USD/CAD (Loonie):
      • Direction: Bullish bias
      • Domestic (CA): Falling crude prices weaken the petro-currency link despite steady BoC policy outlook.
      • Cross: Underperforming Loonie keeps USD/CAD pinned near 1.3910 despite soft DXY.
      • Levels: Support 1.3850 / Resistance 1.3950
    • AUD/USD (Aussie):
      • Direction: Bearish bias
      • Domestic (AU): RBA held rates at 4.35%, disappointing hawks looking for further tightening steps.
      • Cross: Falling copper prices and weak Chinese demand offsets broader DXY soft patch.
      • Levels: Support 0.7000 / Resistance 0.7120
    • NZD/USD (Kiwi):
      • Direction: Bearish bias
      • Domestic (NZ): RBNZ entrenched easing bias after April’s cut to 3.50% keeps Kiwi heavy.
      • Cross: Weak risk appetite in commodity currencies keeps Kiwi pinned near 0.5810.
      • Levels: Support 0.5780 / Resistance 0.5870
    • USD/CHF (Swissy):
      • Direction: Bearish bias
      • Domestic (CH): Deflationary momentum persists as Swiss producer prices fell 0.4% in May.
      • Cross: Strong safe-haven demand drives Swissy to 0.7900 against a weakening dollar.
      • Levels: Support 0.7850 / Resistance 0.7960
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bearish, EUR/JPY Bearish, GBP/JPY Bearish
      • Domestic: ECB deposit rate at 2.50% sits 200bp below BoE’s 4.50% Bank Rate.
      • Cross: BoJ rate hike and cooling UK inflation chip away at JPY cross premiums.
      • Levels: EUR/GBP Support 0.8400 / GBP/JPY Resistance 215.00
    • XAU (Gold):
      • Direction: Neutral bias
      • Domestic (asset-specific): Physical central bank gold purchases and solid physical demand provide strong baseline support.
      • Cross: Safe-haven flows and soft DXY keep gold steady above $4,300/oz.
      • Levels: Support $4,280 / Resistance $4,350
    • XAG (Silver):
      • Direction: Bearish bias
      • Domestic (asset-specific): Declining industrial demand and rising gold-silver ratio pressure prices downward.
      • Cross: Broader commodity liquidations offset support from a weaker US dollar.
      • Levels: Support $28.50 / Resistance $30.20
    • WTI / Brent:
      • Direction: Bearish bias
      • Domestic (asset-specific): Expected Iranian barrels from potential interim deal set to significantly increase global supply.
      • Cross: Plunging prices below $80 reflect global growth concerns and index liquidation.
      • Levels: Brent Support $77.50 / Resistance $81.50
    • Copper:
      • Direction: Bearish bias
      • Domestic (asset-specific): Soft China data adds to acute downside pressure and rising warehouse stocks.
      • Cross: Crowded long positioning (92%ile) risks massive liquidations on weak global growth.
      • Levels: Support $4.30 / Resistance $4.60
    • SPX:
      • Direction: Bullish bias
      • Domestic (US): Goldman traders see room for rally to broaden beyond mega-cap tech winners.
      • Cross: S&P 500 futures hold gains near highs as VIX slides to 16.2.
      • Levels: Futures 5,420 / Cash Support 5,380 / Resistance 5,450
    • NDX:
      • Direction: Bearish bias
      • Domestic (US): Tech heavyweights trim recent gains as real yields rise to 2.17%.
      • Cross: Futures trade softer at 19,820 as traders rotate out of crowded tech.
      • Levels: Support 19,700 / Resistance 20,000
    • US30 (Dow):
      • Direction: Bullish bias
      • Domestic (US): Industrial and cyclical stocks surge as Dow touches historic highs of 40,150.
      • Cross: Lower oil prices boost consumer discretionary outlook and broader market sentiment.
      • Levels: Support 39,800 / Resistance 40,300
    • UK100 (FTSE):
      • Direction: Bullish bias
      • Domestic (UK): UK Burnham political risk weighs slightly but market shrugs it off today.
      • Cross: Rising global risk appetite and weak energy stocks balance FTSE at 8,180.
      • Levels: Support 8,120 / Resistance 8,240
    • DAX:
      • Direction: Bullish bias
      • Domestic (DE): DAX clears historic 25,000 milestone on German inflation hitting 2.0% target.
      • Cross: Lower global energy costs boost major German industrial and manufacturing exporters.
      • Levels: Support 24,850 / Resistance 25,150
    • Nikkei:
      • Direction: Bullish bias
      • Domestic (JP): Nikkei scalped 70,000 intraday, digesting BoJ’s historic rate hike to 1.00%.
      • Cross: US pre-market tech weakness is offset by strong local financial sector bid.
      • Levels: Support 68,500 / Resistance 70,200
    • BTC:
      • Direction: Bullish bias
      • Domestic (asset-specific): Strong institutional ETF inflows support spot prices at two-week highs.
      • Cross: Crowded speculative longs (98%ile) cap immediate upside near $69,200 range top.
      • Levels: Support $67,500 / Resistance $70,000

    Positioning watch: Consensus positioning is dangerously stretched, with short JPY sitting at the absolute 0%ile and S&P 500 net shorts at the 6%ile, exposing both to violent short-squeeze cover rallies on hawkish BoJ rhetoric or supportive macro data. Conversely, crowded long positioning in BTC (98%ile) and Copper (92%ile) presents substantial unwind risks if the broader risk-on regime faces any sudden growth disappointments.

    The pain trade: The pain trade today is a sharp recovery in the US dollar accompanied by a severe sell-off in European equities, triggered if ECB Chief Economist Philip Lane unexpectedly strikes a hawkish tone on wage trackers or if US pre-market yields spike further.

  • Dow Extends Record Run on Geopolitical Relief – Tuesday, 16 June

    Where we are: Dow Jones futures are consolidating near record highs this morning, trading tight around the 40,220 mark ahead of the New York open. This follows Monday’s explosive 350-point cash rally to fresh all-time closing records, driven by a dramatic de-escalation of tensions in the Persian Gulf. The overnight session established a narrow, supportive range of 40,180 to 40,260, comfortably holding above the critical breakout support level at 39,900. We are seeing highly constructive price action as the index digests these multi-day gains, setting a firm launchpad for the cash open.

    What’s driving it: US equity allocation is being heavily reshaped by domestic monetary policy expectations ahead of tomorrow’s Federal Reserve decision, where Chairman Warsh is widely tipped to deliver a rate hold while simultaneously pushing for a more hawkish overhaul of the central bank’s policy framework. US equity investors are actively rotating out of high-multiple technology giants and into defensive blue chips as the US 10-year real yield pushes to 2.17%, creating a stark valuation headwind for the Nasdaq while favoring the Dow’s industrial-heavy mix. The domestic macro backdrop is also absorbing the deflationary impulse of the projected US-Iran Persian Gulf energy deal, which has cooled broader commodity-led inflation expectations as WTI crude holds at $95. This combination of structural policy hawkishness and easing geopolitical tail risk is uniquely suited to the Dow’s cyclical composition.

    • Federal Reserve policy overhang remains the central focus, with tomorrow’s rate decision expected to yield a hold but introduce a hawkish framework shift under Chairman Warsh.
    • Systemic risk pricing has collapsed as the VIX fell 1.48 points to 16.2, signaling clean slate positioning as traders unwind geopolitical hedges ahead of Friday’s formal treaty signing.
    • Speculator positioning reveals a classic under-owned rally, with CFTC net non-commercial positions for the Dow remaining in modest net-short territory at -2,539 contracts (56th percentile), leaving substantial room for chasing behavior on any break higher.

    NY session focus: For the upcoming New York session, all eyes are on the US macro data dump at 08:30 ET, which will dictate whether the Dow can break past its immediate intraday ceiling at 40,300. A soft print will accelerate the value rotation, clearing the path toward 40,500, whereas a hot inflation or activity print risks dragging the index back to test the 39,900 breakout zone. The trade that is working is the long Dow / short Nasdaq relative value play, while chasing late tech momentum on this leg remains highly at risk. The ultimate pain trade is a violent short-squeeze above 40,300 that forces under-allocated macro funds to chase the Dow into uncharted territory.

  • Dow Jones Hits Records as Geopolitical Risks Recede – Tuesday, 16 June

    Where we are: The Dow Jones Industrial Average is consolidating its historic gains in pre-market trade, hovering near record highs at 40,150 after yesterday’s explosive 350-point rally. This four-day winning streak has completely erased the early-month jitters, leaving the blue-chip index well positioned above its 20-day moving average. Overnight ranges were tight as European cash indices digested the news, but the bias remains firmly to the upside as we approach the New York open. We expect the index to find immediate structural support around the previous breakout level of 39,800 if intraday profit-taking emerges.

    What’s driving it: The Federal Reserve’s policy decision tomorrow and the potential for a monetary framework overhaul under Chairman Warsh dominate the domestic macro backdrop, with US 10-year yields holding at 4.48% and the 2-year at 4.09%. This consolidation in yields, paired with a softening US Dollar Broad Index at 119.5073, provides a fertile environment for industrial and cyclical names to lead the broader market. US equity markets are experiencing a powerful internal rotation, as capital flees high-multiple tech giants to fund exposure to Dow cyclicals amidst a collapse in the VIX to 16.2. This rotational bid is amplified by the easing of geopolitical tensions in the Middle East, with the potential Friday signing of the US-Iran deal providing a major tailwind for global risk appetite.

    • US 10-year real yields (TIPS) have ticked up to 2.17%, acting as a headwind for precious metals but validating the robust domestic growth backdrop that supports Dow financials and industrials.
    • A massive rotation is underway out of mega-cap tech and into blue chips, evidenced by Nasdaq 100 underperformance while SpaceX’s 8% gain after its $60 billion Cursor acquisition fuels broader industrial sentiment.
    • CFTC speculator positioning shows non-commercial accounts remain modestly net short at -2,539 contracts (56th percentile), revealing an under-allocated street that must chase this breakout to record highs.

    NY session focus: Our focus for the New York session centers on the 08:30 ET macro data release, which will dictate whether bond yields resume their upward march or solidify the current goldilocks bid. Tactically, buying any intraday dip toward the 39,800 structural support level remains the high-conviction play, while a clean break above yesterday’s record high at 40,250 opens the door for a run toward 40,500. The long-tech/short-value spread trade is highly at risk today as value-driven cyclical sectors continue to attract defensive inflows. The pain trade for the session is a continued squeeze higher that forces the under-allocated short books to capitulate before tomorrow’s critical FOMC decision.

  • NY Session Tactical Brief – Tuesday, 2 June

    Regime: Mixed: VIX steady at 15.32 but yields are pulling back modestly, capping the DXY at 99.05 amid light risk-off sentiment.

    Today’s market themes:

    • ECB watch: Eurozone inflation data reinforces the case for a June rate hike, setting up a potential hawkish surprise.
    • Oil supply: Geopolitical tensions compete with global demand concerns and US-Iran talks, causing volatility.
    • Positioning squeeze: Crowded short JPY and crowded long BTC may be vulnerable given current data.

    The setup: Eurozone CPI data is key today. The market is pricing in a high probability of an ECB rate cut in June, so an upside surprise could trigger a significant EUR rally against both the USD and GBP. Key risk is a weaker-than-expected print, confirming the dovish expectations and leading to EUR weakness. Watch EUR/USD at 1.1650 and US-DE 10Y spread for confirmation.

    Watch list (native time per event):

    • 11:00 CET EUR Core CPI Flash Estimate y/y (forecast 2.4%, prior 2.2%)
    • 10:00 ET USD JOLTS Job Openings (forecast 6.87M, prior 6.87M)
    • 11:30 AEST AUD GDP q/q (forecast 0.5%, prior 0.8%)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed data watch / yield levels
      • Cross: Euro strength / risk sentiment
      • Levels: Support 98.80 / Resistance 99.20
    • EUR/USD:
      • Direction: Bullish
      • Domestic (EU): Inflation data key for ECB path
      • Cross: DXY pullback / US-DE 10Y widening
      • Levels: Support 1.1620 / Resistance 1.1680
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE Bailey speech / Gilt direction
      • Cross: DXY / US-UK 10Y stable
      • Levels: Support 1.3440 / Resistance 1.3500
    • USD/JPY:
      • Direction: Bearish
      • Domestic (JP): Intervention risk / yield curve control
      • Cross: US 10Y stable / risk-off tone
      • Levels: Support 159.50 / Resistance 160.00
    • USD/CAD (Loonie):
      • Direction: Neutral
      • Domestic (CA): WTI under pressure / BoC stance
      • Cross: DXY / US-CA 10Y stable
      • Levels: Support 1.3820 / Resistance 1.3860
    • AUD/USD (Aussie):
      • Direction: Neutral
      • Domestic (AU): GDP and commodity prices in focus
      • Cross: DXY / US-AU 10Y spread
      • Levels: Support 0.7150 / Resistance 0.7200
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ easing bias / dairy prices
      • Cross: DXY / risk sentiment
      • Levels: Support 0.5900 / Resistance 0.5950
    • USD/CHF (Swissy):
      • Direction: Neutral
      • Domestic (CH): SNB stance / Swiss data
      • Cross: DXY / risk-off flows
      • Levels: Support 0.7840 / Resistance 0.7880
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bullish, EUR/JPY Bullish, GBP/JPY Neutral
      • Domestic: ECB vs BoE/BoJ differentials
      • Cross: DXY / risk sentiment
      • Levels: Watch relative yield spreads
    • XAU (Gold):
      • Direction: Bullish
      • Domestic (asset-specific): Real yields down / CB demand
      • Cross: DXY / risk aversion
      • Levels: Support 4500 / Resistance 4550
    • XAG (Silver):
      • Direction: Bullish
      • Domestic (asset-specific): industrial demand / gold link
      • Cross: DXY / risk sentiment
      • Levels: Support 7500 / Resistance 7700
    • WTI / Brent:
      • Direction: Bearish
      • Domestic (asset-specific): EIA data / OPEC / US-Iran talks
      • Cross: DXY / risk sentiment
      • Levels: Support 90.00 / Resistance 92.00
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China demand outlook
      • Cross: DXY / global growth outlook
      • Levels: Support 660 / Resistance 670
    • SPX:
      • Direction: Neutral
      • Domestic (US): earnings / Fed watch / yields
      • Cross: VIX regime / global risk
      • Levels: Futures support 7580 / cash resistance 7620
    • NDX:
      • Direction: Neutral
      • Domestic (US): earnings / real yields
      • Cross: Rate sensitivity / VIX
      • Levels: Support 30300 / Resistance 30600
    • US30 (Dow):
      • Direction: Neutral
      • Domestic (US): earnings / cyclical tone
      • Cross: Bond-yield reaction
      • Levels: Support 50700 / Resistance 51000
    • UK100 (FTSE):
      • Direction: Bullish
      • Domestic (UK): Sterling direction / Gilt yields
      • Cross: Global risk / US tone
      • Levels: Support 23200 / Resistance 23400
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields / data watch
      • Cross: US tech / DXY
      • Levels: Support 25100 / Resistance 25300
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY level / JGB
      • Cross: US tech / risk sentiment
      • Levels: Support 65500 / Resistance 66700
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): funding rates / ETF flows
      • Cross: DXY / risk sentiment / Nasdaq correlation
      • Levels: Support 68000 / Resistance 70000

    Positioning watch: JPY remains heavily shorted (0th percentile), increasing squeeze risk if the BoJ signals policy normalization. BTC is also a crowded long (94th percentile), leaving it vulnerable to profit-taking on any risk-off move.

    The pain trade: A surprise hawkish signal from the ECB, combined with soft US data, would spark a EUR rally and punish USD longs, while forcing JPY shorts to cover aggressively.

  • Dow Jones Bulls Face Resistance After Strong Run – Tuesday, 2 June

    Where we are: Dow futures are currently trading at 50893, down 179 points or 0.35% on the day. The overnight range has been relatively contained between 50871 and 51083. This puts the Dow futures below yesterday’s cash close of 51079, suggesting a slightly weaker open for the New York session. The cash index is trading above the intra-day low of 50767, suggesting this may be initial support.

    What’s driving it: The Dow is seeing some pullback following a strong run, with profit-taking likely in play ahead of potentially volatile economic data. We see a risk of downside surprise in this morning’s JOLTS data and think this may cause a risk-off move. Despite generally positive sentiment in Asia, where the Nikkei gained 0.16%, the mixed picture in Europe is a negative sign. A moderately short speculator positioning for the Dow, -9,324 contracts net, presents a squeeze risk if the market turns higher, but that feels remote right now.

    • US 10Y yields are slightly lower at 4.432%, indicating some risk aversion.
    • The DXY is also slightly lower at 99.05, providing limited support to the index.
    • Nvidia’s move into the PC chip market is weighing on sentiment in other tech stocks like AMD and Intel, even as the Nasdaq remains buoyant.

    NY session focus: Keep an eye on the 10:00 ET release of the JOLTS Job Openings figure, as a deviation from the forecast of 6.87M could trigger a significant market reaction. We are watching the 50767 cash level as a key support — a break below that could open the door for further downside towards 50500. The trade that has been working recently is long tech, but that feels stretched and vulnerable, especially if broader sentiment sours. The pain trade for the Dow would be a strong upside surprise in JOLTS, triggering a short squeeze that sends the index back above 51,000 quickly.

  • Dow Momentum Continues as Tech Sector Drives Gains – Monday, 1 June

    Where we are: The Dow Jones cash index is currently trading at 51033, up 259 points on the day. Futures are a touch firmer at 51246, up 197 points, having traded in a range between 50999 and 51382. The index is building on Friday’s gains and continues to push higher, buoyed by strong tech sentiment.

    What’s driving it: The primary driver remains strength in the tech sector. Nvidia’s announcement of its new RTX Spark Superchip has injected further momentum into the market. Rising US yields are also supporting gains, though modestly, with the 10-year at 4.450%.

    • Powell’s acceptance speech at the John F. Kennedy Library Foundation earlier provided a backdrop of steady confidence regarding future economic resilience.
    • Net non-commercial positioning in Dow futures is moderately short, at -9,324 contracts.
    • The VIX remains subdued at 15.74, indicating continued risk-on sentiment.

    NY session focus: All eyes will be on the 10:00 ET release of the ISM Manufacturing PMI, forecast at 53.3, and ISM Manufacturing Prices, forecast at 85.3. Watch for a break above the intraday high of 51382 in the Dow futures to confirm bullish momentum. A failure to sustain gains above 51000 could signal a near-term pullback. Later, at 20:30 ET, traders will digest any market-relevant comments from FOMC Member Powell. The trade that’s working is buying the dip on tech names. The trade at risk is shorting tech into continued positive news flow. The pain trade is a sharp reversal driven by hotter-than-expected inflation figures in the ISM Manufacturing Prices.

  • NY Session Tactical Brief – Monday, 1 June

    Regime: Risk-on, supported by easing global inflation expectations as indicated by lower US 10Y yields and firm equities futures.

    Today’s market themes:

    • ISM Day: US ISM Manufacturing PMI key for near-term Fed rate path signals.
    • USD strength: DXY gains traction amid mixed global growth outlook, impacting emerging market stocks.
    • Oil price volatility: Geopolitical tensions and supply concerns continue to underpin oil prices.

    The setup: ISM Manufacturing PMI at 10:00 ET will be crucial in determining the near-term Fed outlook. A print above 53.3 could fuel further DXY gains and pressure risk assets, while a miss could see yields dip and equity futures rally. Watch US 10Y around 4.45%.

    Watch list (native time per event):

    • 10:00 ET USD: ISM Manufacturing PMI (forecast 53.3, prior 52.7)
    • 10:00 ET USD: ISM Manufacturing Prices (forecast 85.3, prior 84.6)
    • 20:30 ET USD: FOMC Member Powell Speaks

    Bias by asset:

    • DXY:
      • Direction: Higher.
      • Domestic (US): ISM data crucial; Fed rhetoric leaning hawkish.
      • Cross: Risk-off flows supportive; EUR/GBP weakness adds to momentum.
      • Levels: Resistance 99.20, Support 98.80.
    • EUR/USD:
      • Direction: Lower.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength weighs; US-DE 10Y widening pressures.
      • Levels: Resistance 1.1670, Support 1.1630.
    • GBP/USD (Cable):
      • Direction: Neutral to slightly lower.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength a headwind; US-UK 10Y supportive.
      • Levels: Resistance 1.3480, Support 1.3440.
    • USD/JPY:
      • Direction: Higher.
      • Domestic (JP): BoJ still slow to tighten; intervention risks persist.
      • Cross: US 10Y driving force; DXY strength adds to upward pressure.
      • Levels: Resistance 159.75, Support 159.20.
    • USD/CAD (Loonie):
      • Direction: Higher.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength dominating; US-CA 10Y favors USD upside.
      • Levels: Resistance 1.3850, Support 1.3790.
    • AUD/USD (Aussie):
      • Direction: Lower.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; China growth concerns remain.
      • Levels: Resistance 0.7190, Support 0.7150.
    • NZD/USD (Kiwi):
      • Direction: Lower.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; risk-off sentiment hurting commodity currencies.
      • Levels: Resistance 0.5990, Support 0.5940.
    • USD/CHF (Swissy):
      • Direction: Higher.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; safe-haven demand muted.
      • Levels: Resistance 0.7870, Support 0.7820.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed, relative CB stance drives direction.
      • Domestic: ECB vs BoE/BoJ expectations key for cross-pair movements.
      • Cross: Overall DXY strength; risk impacting JPY leg most.
      • Levels: Monitor key levels on a case-by-case basis.
    • XAU (Gold):
      • Direction: Lower.
      • Domestic (asset-specific): Real yields rising limits upside.
      • Cross: DXY strength a major headwind.
      • Levels: Resistance 4580, Support 4520.
    • XAG (Silver):
      • Direction: Mixed.
      • Domestic (asset-specific): Industrial demand supportive, but volatile.
      • Cross: DXY strength weighs; risk appetite fluctuates.
      • Levels: Resistance 7660, Support 7420.
    • WTI / Brent:
      • Direction: Higher.
      • Domestic (asset-specific): Geopolitical tensions support; supply concerns.
      • Cross: DXY strength can limit some upside.
      • Levels: WTI Resistance 91.50, Support 88.50.
    • Copper:
      • Direction: Higher.
      • Domestic (asset-specific): China demand concerns still linger despite recent gains.
      • Cross: Dollar strength may temper upside for now.
      • Levels: Resistance 660, Support 640.
    • SPX:
      • Direction: Sideways to slightly higher.
      • Domestic (US): Data-dependent Fed outlook influences direction.
      • Cross: Risk sentiment driving force; watch VIX reaction.
      • Levels: Futures resistance 7630, cash support 7570.
    • NDX:
      • Direction: Sideways.
      • Domestic (US): Earnings season winding down, focus on macro.
      • Cross: Higher rates sensitivity; VIX affecting valuations.
      • Levels: Resistance 30600, Support 30350.
    • US30 (Dow):
      • Direction: Sideways to slightly higher.
      • Domestic (US): Cyclical sectors showing resilience.
      • Cross: Bond yield direction drives sentiment.
      • Levels: Resistance 51400, Support 50700.
    • UK100 (FTSE):
      • Direction: Lower.
      • Domestic (UK): Sterling weakness supportive, but overall global risk weighs.
      • Cross: Heavily affected by general mood across US/global markets.
      • Levels: Resistance 23450, Support 23300.
    • DAX:
      • Direction: Sideways.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech sector; DXY driving some investor sentiment.
      • Levels: Resistance 25350, Support 25100.
    • Nikkei:
      • Direction: Sideways to slightly higher.
      • Domestic (JP): Consolidation around record highs.
      • Cross: US tech; overall risk appetite important for sentiment.
      • Levels: Resistance 67300, Support 66200.
    • BTC:
      • Direction: Sideways to slightly lower.
      • Domestic (asset-specific): ETF flows influence price.
      • Cross: Heavily linked to DXY; sensitive to tech direction.
      • Levels: Resistance 74100, Support 71800.

    Positioning watch: USD is crowded long at 81st percentile, and JPY remains crowded short (0th percentile) presenting squeeze risks on any dovish pivot from the Fed or a BoJ hawkish surprise. Copper and BTC are crowded long as well, both at 94th, suggesting downside risks on weaker data.

    The pain trade: A weaker-than-expected ISM, combined with Powell hinting at openness to rate cuts, would trigger a sharp rally in bonds and equities, squeezing USD longs and JPY shorts simultaneously.

  • Dow Eyes Fresh Record Highs Awaiting ISM – Monday, 1 June

    Where we are: The Dow Jones cash index is currently trading at 51033, up 259 points, or 0.51%, having already probed as high as 51094. Futures are printing 51233, up 184 points. The overnight range saw a low of 50999 and a high of 51382. The Dow continues to build on Friday’s gains, poised to test fresh all-time highs.

    What’s driving it: The underlying bid in US equities continues, supported by positive sentiment from the tech sector detailed in analyst calls, even as broader macro headwinds persist. The 2s10s spread is widening, currently at 0.47%, suggesting some steepening of the curve. With no domestic data prints yet this morning, the tape is likely to continue tracking risk until this morning’s ISM data release. Powell’s planned speech tonight is unlikely to move the dial.

    • The ISM Manufacturing PMI at 10:00 ET is expected to show continued expansion, printing at 53.3 vs a prior of 52.7.
    • ISM Manufacturing Prices, also at 10:00 ET, is expected to edge higher to 85.3 from 84.6, likely adding to inflation concerns.
    • Net non-commercial positioning is moderately short the Dow at -9,324 contracts. A strong bid today could prompt a squeeze.

    NY session focus: All eyes will be on the 10:00 ET release of the ISM Manufacturing PMI and ISM Manufacturing Prices. A stronger-than-expected print on the prices paid component could weigh on risk assets and see the Dow pare gains. Key levels to watch are resistance at the intraday high of 51382 and support at 50999. Long Dow remains the working trade, but is vulnerable to an inflation surprise. Powell speaks again at 20:30 ET. The pain trade here is a sharp risk-off move sparked by unexpected macro tightening, forcing shorts to cover.

  • NY Session Tactical Brief – Friday, 29 May

    Regime: Mixed, with VIX at 16.29 reflecting contained risk, but rising US 10Y yield at 4.439% suggesting real-rate concerns.

    Today’s market themes:

    • Dominant: Real-rate repricing as inflation proves stickier than expected, driving USD strength and pressuring risk assets.
    • Secondary: Geopolitical tensions (Iran) and its impact on oil supply.

    The setup: Markets are pricing in a more hawkish Fed, underpinned by resilient economic data and persistent inflation. Short equities, targeting a dip in S&P 500 to 7500, with a stop loss at 7600. Risk is a dovish surprise from BoE Gov Bailey’s speech or weaker-than-expected Canadian GDP.

    Watch list (native time per event):

    • 08:29 CET EUR: German Prelim CPI m/m (forecast 0.1%, prior 0.6%)
    • 09:20 London GBP: BOE Gov Bailey Speaks
    • 08:30 ET CAD: GDP m/m (forecast 0.1%, prior 0.2%)

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Hawkish Fed rhetoric, resilient data, rising yields.
      • Cross: Global risk aversion, EUR/USD weakness.
      • Levels: Support 98.90, Resistance 99.20.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): ECB’s mild easing bias, weaker growth data.
      • Cross: DXY strength, widening US-DE 10Y spread.
      • Levels: Support 1.1620, Resistance 1.1660.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE dovish tilt, potential service CPI weakness.
      • Cross: DXY strength, negative US-UK 10Y spread.
      • Levels: Support 1.3400, Resistance 1.3460.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ slow normalization, intervention unlikely near-term.
      • Cross: Rising US 10Y, DXY strength, risk-on mood.
      • Levels: Support 159.00, Resistance 159.50.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): Weaker GDP, sensitivity to oil price moves.
      • Cross: DXY strength, widening US-CA 10Y spread.
      • Levels: Support 1.3780, Resistance 1.3840.
    • AUD/USD (Aussie):
      • Direction: Neutral.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, China growth uncertainty.
      • Levels: Support 0.7150, Resistance 0.7180.
    • NZD/USD (Kiwi):
      • Direction: Neutral.
      • Domestic (NZ): RBNZ rate hike expectations, dairy price watch.
      • Cross: DXY strength, risk sentiment.
      • Levels: Support 0.5930, Resistance 0.5985.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias, low Swiss yields.
      • Cross: DXY strength, diminishing safe-haven appeal.
      • Levels: Support 0.7800, Resistance 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral.
      • Domestic: Relative CB stance + yields: EUR/GBP BoE more hawkish, EUR/JPY BoJ less hawkish, GBP/JPY both dovish.
      • Cross: DXY, risk sentiment influences cross-of-crosses dynamics.
      • Levels: Monitor each cross’s intra-day range.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields, muted breakevens.
      • Cross: DXY strength, risk-off reducing demand.
      • Levels: Support 4500, Resistance 4580.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Subdued industrial demand, weak gold.
      • Cross: DXY strength, risk aversion hurting industrial metals.
      • Levels: Support 7500, Resistance 7700.
    • WTI / Brent:
      • Direction: Bearish.
      • Domestic (asset-specific): Potential US-Iran agreement easing supply risks.
      • Cross: DXY strength, risk-off sentiment.
      • Levels: WTI Support 86.50, Resistance 89.00.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns, LME inventory levels.
      • Cross: DXY strength, global growth proxy weakening.
      • Levels: Support 635, Resistance 645.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Rising yields, earnings concerns.
      • Cross: VIX stabilizing, but fragile; global risk tone negative.
      • Levels: Futures support 7570, Cash resistance 7570.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Rising real yields, mega-cap vulnerability.
      • Cross: Rates-sensitivity, VIX uncertainty.
      • Levels: Support 30200, Resistance 30400.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Mixed earnings, cyclical sensitivity.
      • Cross: Bond-yield reaction, less sensitive than tech.
      • Levels: Support 50700, Resistance 50900.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): Sterling strength capping gains.
      • Cross: Global risk-off offset by weaker GBP.
      • Levels: Support 23300, Resistance 23550.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Bund yields rising, weak EU data.
      • Cross: US tech weakness, DXY strength adding pressure.
      • Levels: Support 25000, Resistance 25200.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY weakness supportive short-term, BoJ uncertainty.
      • Cross: US tech correlation, overall risk sentiment.
      • Levels: Support 65000, Resistance 66500.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Weak ETF flows, elevated funding rates.
      • Cross: DXY strength, risk aversion hitting crypto assets.
      • Levels: Support 73000, Resistance 74000.

    Positioning watch: JPY is crowded short (4th percentile), and AUD is crowded long (98th percentile). A hawkish surprise from the BoJ or disappointing China data could trigger a painful squeeze.

    The pain trade: A surprisingly dovish BOE and weak US data, fueling a rapid unwinding of USD longs and a squeeze of crowded JPY shorts.

  • Dow Jones Set for Further Gains – Friday, 29 May

    Where we are: Dow futures are currently trading at 50860, up 110 points or 0.22% on the day. The cash Dow closed yesterday at 50669, and the futures have traded in a range of 50704-50904 so far today. This suggests a positive open in New York, potentially pushing the Dow to fresh record highs.

    What’s driving it: Despite slight weakness in S&P 500 and Nasdaq futures, the Dow continues to find support, likely driven by strength in financial and consumer defensive sectors. The underlying strength in the US economy, as reflected in recent Costco sales data indicating strong gasoline demand, continues to underpin the market. Furthermore, while US 10Y yields are slightly higher at 4.439, the 2s10s spread remains positive at 0.46%, suggesting a less inverted yield curve and potentially easing recession fears. We see a supportive environment for continued gains in the Dow.

    • Costco’s same-store sales rising 9.8% during its third quarter points to robust consumer spending.
    • Net non-commercial positioning is moderately short at -10,765 contracts, suggesting room for further upside as shorts cover.
    • The VIX is down to 16.29, reflecting decreased market volatility and increased investor confidence.

    NY session focus: Focus for the New York session will be on monitoring the performance of key Dow components and any further developments regarding US-Iran relations, especially given its potential impact on oil prices and inflation. Keep an eye on the 10-year yield; a break above 4.50% could dampen enthusiasm. Initial resistance is at the intraday high of 50904. The trade that’s working is long Dow, short Nasdaq. The trade that’s at risk is short Dow given the overall positive momentum. The pain trade is a sudden risk-off move sparked by geopolitical jitters or a hawkish Fed surprise.

  • NY Session Tactical Brief – Thursday, 28 May

    Regime: Risk-off, driven by rising Mideast tensions and a flight to safety, reflected in falling US yields and a VIX above 17.

    Today’s market themes:

    • Oil supply scare: Geopolitical risks in the Black Sea and Middle East fuel concerns over energy supply, boosting crude prices.
    • Core PCE watch: Markets brace for key US inflation data, which could dictate the Fed’s near-term policy path.
    • Crowded shorts at risk: GBP, JPY and Nasdaq are crowded short based on the CFTC positioning.

    The setup: Rising geopolitical risks are pushing investors into safe-haven assets, weakening equities and boosting oil. Focus is on the 08:30 ET Core PCE print. A surprise to the upside could trigger a risk-off move, whereas a downside surprise could trigger a rally. US 10Y is at 4.479%.

    Watch list (native time per event):

    • 14:00 NZT NZD: Annual Budget Release (Medium)
    • 08:30 ET USD: Core PCE Price Index m/m (High) forecast 0.3%, prior 0.3%
    • 08:30 ET USD: Prelim GDP q/q (High) forecast 2.0%, prior 0.7%

    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: Neutral to slightly lower.
      • Domestic (US): Fed policy dependent on PCE; US yields are key.
      • Cross: Risk-off flows provide some support; but geopolitical tension is negative.
      • Levels: Support at 99.11, resistance at 99.50.
    • EUR/USD:
      • Direction: Neutral.
      • Domestic (EU): Lagarde’s commentary; Bund yields stable; watching sovereign spreads.
      • Cross: DXY weakness offsetting risk-off; US-DE 10Y spread supportive.
      • Levels: Resistance at 1.1640, support near 1.1585.
    • GBP/USD (Cable):
      • Direction: Neutral to bearish.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength limiting upside; risk-off sentiment hurts Cable.
      • Levels: Resistance at 1.3430, support at 1.3370.
    • USD/JPY:
      • Direction: Neutral to bullish.
      • Domestic (JP): Intervention risk remains high; JGB yields capped by BoJ.
      • Cross: US 10Y still above 4.45%; DXY support; risk-off may trigger unwinds.
      • Levels: Support at 159.30, resistance near 159.65.
    • USD/CAD (Loonie):
      • Direction: Neutral to bullish.
      • Domestic (CA): WTI price support; BoC likely on hold in June.
      • Cross: DXY strength; US-CA 10Y spread holds.
      • Levels: Support around 1.3835, resistance near 1.3870.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): RBA likely to pause; iron ore volatility.
      • Cross: DXY strength; China growth concerns.
      • Levels: Resistance at 0.7145, support around 0.7100.
    • NZD/USD (Kiwi):
      • Direction: Neutral.
      • Domestic (NZ): Annual budget release; RBNZ expectations muted.
      • Cross: DXY strength limiting upside; risk-off sentiment weighs.
      • Levels: Resistance near 0.5910, support around 0.5865.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias; Swiss yields suppressed.
      • Cross: Safe-haven demand into USD; DXY strength.
      • Levels: Support at 0.7865, resistance near 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bearish.
      • Domestic: ECB vs BoE, BoJ; relative yields.
      • Cross: DXY impact on each leg; risk-off impacting JPY crosses.
      • Levels: Monitor range breaks from current levels.
    • XAU (Gold):
      • Direction: Bullish.
      • Domestic (asset-specific): Falling real yields supporting; breakevens stable.
      • Cross: Risk-off flows; DXY.
      • Levels: Support near 4400, resistance at 4490.
    • XAG (Silver):
      • Direction: Neutral.
      • Domestic (asset-specific): Industrial demand, Gold-Silver ratio monitoring.
      • Cross: DXY and risk appetite dictate direction.
      • Levels: Support near 7200, resistance at 7500.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Supply concerns, OPEC policy, EIA data.
      • Cross: Risk-off bid; DXY.
      • Levels: Monitor for breakouts above $93.00 and $96.00 respectively.
    • Copper:
      • Direction: Neutral.
      • Domestic (asset-specific): China demand, LME stock levels, supply side constraints.
      • Cross: Global growth concerns.
      • Levels: Support near $624.00, resistance near $636.00.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Fed policy / US yield reaction; earnings season ongoing.
      • Cross: VIX spikes on geopolitical concern; risk-off tone prevails.
      • Levels: S&P fut: resistance at 7557, support at 7505.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Mega-cap earnings; real yield sensitivity on long-duration assets.
      • Cross: Rates sensitivity and elevated VIX.
      • Levels: Resistance at 30135, support near 29765.
    • US30 (Dow):
      • Direction: Bearish.
      • Domestic (US): Cyclical tone; yield movements influencing industrial/financial sectors.
      • Cross: Bond yield reaction.
      • Levels: Resistance at 50819, support at 50576.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Sterling weakness; Gilt yield reactions.
      • Cross: Global risk; US market sentiment dampening performance.
      • Levels: Resistance near 23390, support around 23190.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Bund yields; ECB rhetoric; IFO / ZEW.
      • Cross: US tech weakness impacting; DXY.
      • Levels: Resistance at 25175, support at 24995.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY moves, JGB yields, BoJ comments influencing sentiment.
      • Cross: US tech pressure impacting; overall risk tone.
      • Levels: Resistance near 65165, support around 63880.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates, ETF flows, and on-chain data under pressure.
      • Cross: DXY is supportive but broader risk-off pulls it down.
      • Levels: Resistance near 74500, support around 72500.

    Positioning watch: CFTC data shows crowded shorts in GBP, JPY and Nasdaq and crowded longs in AUD, Copper and Bitcoin. Any positive surprise from economic data (especially the US PCE) or easing of geopolitical tensions could trigger a short squeeze in GBP, JPY and Nasdaq.

    The pain trade: A weaker-than-expected Core PCE print would trigger a relief rally in risk assets, squeezing shorts in GBP, JPY and Nasdaq, and pressuring the DXY and pushing real-rates lower.

  • Dow Bulls Ready for GDP Test – Thursday, 28 May

    Where we are: The Dow Jones futures are currently trading at 50659, down 151 points or 0.30% on the day, after a relatively tight overnight range of 50576-50819. This is slightly below yesterday’s cash close of 50644, which itself gained 157 points on the day. The futures market is currently holding above the 50500 level, but showing signs of vulnerability pre-market.

    What’s driving it: The market’s cautious tone ahead of the 08:30 ET US data dump is the primary driver. Specifically, the core PCE and prelim GDP figures are front and center, as the market tries to gauge the Fed’s likely path. We’ve seen a notable easing in yields across the curve, with the 10Y at 4.479% and the 2Y at 4.049%, as the market continues to digest recent Fed commentary and lower expectations for aggressive rate hikes. Lower real yields are giving gold a tailwind, and equity markets are also benefitting.

    • The US 10Y yield is down 2.2bp on the day at 4.479%, extending its recent decline, reflecting easing inflation concerns.
    • Net non-commercial Dow positioning is moderately short at -10,765 contracts, but increased 7,203 w/w.
    • Jefferson spoke overnight, but his remarks regarding the US economy and global developments were not market moving.

    NY session focus: All eyes are on the 08:30 ET data trifecta: Core PCE, Prelim GDP, and Unemployment Claims. A beat on GDP combined with sticky PCE could reignite inflation fears and send yields higher, weighing on the Dow. Conversely, a soft GDP print alongside a benign PCE could fuel dovish expectations and provide a boost. Key levels to watch are 50500 as initial support and 50800 as resistance. The trade at risk is shorting the Dow, particularly if the data comes in dovish. The pain trade would be a hot GDP and PCE print, triggering a significant sell-off and forcing shorts to cover.

  • NY Session Tactical Brief – Wednesday, 27 May

    Regime: Mixed. VIX sits at 16.59, while US 2Y yields are edging higher and the DXY hovers around 98.95, signaling risk-off sentiment battling positive momentum.

    Today’s market themes:

    • Strait of Hormuz tension eases: Oil prices plummet on reports of progress restoring shipping through the Strait, impacting commodity currencies.
    • Australian CPI miss: Cooler-than-expected Australian inflation data pressure the AUD, raising RBA policy questions.
    • RBNZ telegraphs tightening: The Reserve Bank of New Zealand holds steady but signals future rate hikes, boosting the Kiwi.

    The setup: Oil’s sharp drop after Iran’s signal about Strait of Hormuz shipping is cascading through markets. Watch CAD and commodity FX for further weakness if oil sustains its losses. A break below $87.80 in WTI could trigger a further sell-off.

    Watch list (native time per event):

    • 11:30 AEST AUD: CPI y/y (forecast 4.4%, prior 4.6%)
    • 14:00 NZT NZD: Official Cash Rate (forecast 2.25%, prior 2.25%)
    • 09:00 JST JPY: BOJ Gov Ueda Speaks

    Bias by asset:

    • DXY:
      • Direction: Sideways.
      • Domestic (US): Fed signaling mixed / inflation expectations remain sticky.
      • Cross: Oil impact / safe-haven demand ebb and flow.
      • Levels: Support 98.80 / Resistance 99.20.
    • EUR/USD:
      • Direction: Neutral.
      • Domestic (EU): ECB hawks vs doves battle / Bund yields rangebound.
      • Cross: DXY weakness offset by risk-off flow / US-DE 10Y widening.
      • Levels: Support 1.1630 / Resistance 1.1680.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE cut expectations building / Gilt yields under pressure.
      • Cross: DXY strength cap / US-UK 10Y divergence.
      • Levels: Support 1.3400 / Resistance 1.3480.
    • USD/JPY:
      • Direction: Bullish, but watch intervention.
      • Domestic (JP): BoJ cautious / Ueda verbal intervention / JGB constrained.
      • Cross: US 10Y supportive / risk-on flow offset by intervention threat.
      • Levels: Support 159.00 / Resistance 159.50.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC dovish / CAD vulnerable to oil rout.
      • Cross: DXY strength / US-CA 10Y supportive.
      • Levels: Support 1.3800 / Resistance 1.3850.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): Weak CPI raises RBA pause risk.
      • Cross: DXY strength / US-AU 10Y negative spread / China uncertainty.
      • Levels: Support 0.7100 / Resistance 0.7180.
    • NZD/USD (Kiwi):
      • Direction: Bullish.
      • Domestic (NZ): RBNZ hawkish signal / OCR supports.
      • Cross: DXY strength offset by domestic policy tailwind.
      • Levels: Support 0.5850 / Resistance 0.5920.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength / safe-haven fading.
      • Levels: Support 0.7820 / Resistance 0.7880.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed.
      • Domestic: Relative BoE/ECB/BoJ stance driving flows.
      • Cross: DXY chop / risk sentiment mixed.
      • Levels: Monitor individual charts for key levels.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields hurt gold / CB demand slows.
      • Cross: DXY strength / reduced safe-haven bid.
      • Levels: Support 4450 / Resistance 4500.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Industrial demand concerns / Gold underperformance.
      • Cross: DXY strength / risk aversion fading.
      • Levels: Support 7350 / Resistance 7500.
    • WTI / Brent:
      • Direction: Bearish.
      • Domestic (asset-specific): Strait of Hormuz progress weighs / EIA build risk.
      • Cross: DXY strength headwind / global growth worries.
      • Levels: WTI Support $87.50 / Resistance $90.00.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns / LME inventories rise.
      • Cross: DXY impact / global growth proxy weakens.
      • Levels: Support 630 / Resistance 640.
    • SPX:
      • Direction: Sideways.
      • Domestic (US): Earnings season tapering / Fed watch / yield sensitivity.
      • Cross: VIX stable / global growth concerns offsetting.
      • Levels: Futures support 7530 / resistance 7570.
    • NDX:
      • Direction: Sideways.
      • Domestic (US): Mega-cap results mixed / real yield pressure building.
      • Cross: Higher rates sensitivity / VIX benign.
      • Levels: Support 30000 / Resistance 30400.
    • US30 (Dow):
      • Direction: Sideways.
      • Domestic (US): Cyclical earnings mixed / bond yields a factor.
      • Cross: Sentiment dependent on yields / relative valuation.
      • Levels: Support 50500 / Resistance 50800.
    • UK100 (FTSE):
      • Direction: Bullish.
      • Domestic (UK): Sterling weakness helps / commodity strength supports.
      • Cross: Global risk on / US data impact.
      • Levels: Support 23300 / Resistance 23550.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech influence / DXY impact / risk tone.
      • Levels: Support 25200 / Resistance 25400.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY intervention risk / profit-taking after rally.
      • Cross: US tech / risk off.
      • Levels: Support 64500 / Resistance 65500.
    • BTC:
      • Direction: Sideways.
      • Domestic (asset-specific): ETF flows slowing / funding rates elevated.
      • Cross: DXY impact / risk correlated.
      • Levels: Support $75000 / Resistance $76000.

    Positioning watch: CFTC data shows crowded short positions in GBP and JPY, suggesting squeeze risk if data surprises positively. AUD and Copper are crowded longs, vulnerable to disappointment.

    The pain trade: A strong US data print today, particularly on inflation, would force a repricing of Fed expectations, hammering bonds and risk assets as the DXY surges.