Category: UK

  • Guppy Remains Bid on BoJ Normalisation Concerns – Wednesday, 13 May

    Snapshot: GBP/JPY trades near 193.40, up 0.2% on the session. Persistent hawkish undertones from the BoJ, specifically Ueda’s willingness to hike further, continue to weigh on the Yen. No UK or US data of note prints before the NY open.

    • Resistance at 193.75 – breach would suggest a run at 194.00.
    • Rising VIX indicates broader risk-off sentiment that, if sustained, could cap gains despite Yen weakness.

    Bias into NY: Bullish GBP/JPY, targeting 193.75. BoJ normalisation bets, amplified by rising US real yields underpinning the dollar, will likely keep Yen bears in control, allowing Sterling to extend its gains.

  • NY Session Tactical Brief – Tuesday, 12 May

    Regime: Risk-off, driven by stronger-than-expected US CPI data and escalating Middle East tensions, pushing the VIX higher and US 10Y yields up 5bp to 4.43%.

    Today’s market themes:

    • Real-rate repricing: Hotter CPI print fuels hawkish Fed bets, pressuring risk assets.
    • Geopolitical risk: Iran war uncertainty keeps oil elevated, supporting inflation concerns.
    • Crowded shorts: Potential for squeeze in JPY, GBP, and NZD if risk sentiment improves.

    The setup: The stronger-than-expected US CPI print has triggered a hawkish repricing of Fed expectations, sending US yields higher and the dollar stronger. This is pressuring risk assets, particularly tech and emerging markets. The trade is to fade rallies in risk assets, but watch for potential short squeezes in crowded short currencies if geopolitical risks abate or US data disappoints. US 10Y at 4.43%, DXY at 98.25.

    Watch list (native time per event):

    • 08:30 ET USD: Core CPI m/m (forecast 0.3%, prior 0.2%)
    • 11:59 ET USD: Fed Chair Nomination Vote (forecast Pass, prior —)
    • 11:30 AEST AUD: Wage Price Index q/q (forecast 0.8%, prior 0.8%)

    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): Hawkish Fed repricing on CPI beat. Rising US yields support.
      • Cross: Risk-off flows, safe-haven demand, EM weakness.
      • Levels: Resistance at 98.50, support at 98.00.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, widening US-DE 10Y yield spread, risk-off sentiment.
      • Levels: Resistance at 1.0800, support at 1.0750.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): Rising UK borrowing costs pressure.
      • Cross: Stronger DXY, widening US-UK 10Y yield spread, risk aversion.
      • Levels: Resistance at 1.3550, support at 1.3500.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ remains dovish. Intervention risk looming.
      • Cross: Higher US 10Y yields, strong DXY, risk-off bids into USD.
      • Levels: Resistance at 158.00, support at 157.00.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, US-CA 10Y yield spread widening.
      • Levels: Resistance at 1.3750, support at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): Awaiting Wage Price Index data.
      • Cross: Stronger DXY, US-AU 10Y yield spread widening, risk aversion.
      • Levels: Resistance at 0.7220, support at 0.7175.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ easing bias remains in place.
      • Cross: Stronger DXY, US-NZ 10Y yield spread widening, risk-off flows.
      • Levels: Resistance at 0.5960, support at 0.5920.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, waning safe-haven appeal of CHF.
      • Levels: Resistance at 0.7820, support at 0.7780.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bearish, GBP/JPY: Bearish.
      • Domestic: Relative central bank policy divergence remains key driver.
      • Cross: DXY strength supports JPY and GBP.
      • Levels: Monitor individual cross support/resistance.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields pressure gold.
      • Cross: Stronger DXY, risk-off flows less supportive with rates rising.
      • Levels: Resistance at $4,720, support at $4,680.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): No fresh catalyst — sensitive to overall risk tone.
      • Cross: Stronger DXY, risk-off sentiment, industrial demand concerns.
      • Levels: Monitor gold for direction, lower volatility.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Supply disruption fears, escalating geopolitical tensions.
      • Cross: Weaker DXY provides some support, but risk-off a headwind.
      • Levels: Watch for Iran ceasefire news.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns weigh.
      • Cross: Stronger DXY, global growth proxy suffers from risk-off sentiment.
      • Levels: Monitor China data.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Higher yields, earnings rotation away from growth.
      • Cross: Elevated VIX, global risk-off sentiment.
      • Levels: Futures at 5185. Support at 5170, resistance at 5200.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Sensitive to real yields, mega-cap earnings under pressure.
      • Cross: Rates sensitivity, VIX elevation.
      • Levels: Monitor tech stocks for price action.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Financials and industrials facing mixed earnings.
      • Cross: Bond-yield reaction muted.
      • Levels: Trading near flatline, awaiting catalyst.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Weaker Sterling, higher Gilt yields.
      • Cross: Global risk, US tone negative.
      • Levels: Trading lower in Europe.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech weakness, stronger DXY, risk aversion.
      • Levels: Trading lower on lack of drivers.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY weakness capped by intervention risk.
      • Cross: US tech selling pressure, risk off.
      • Levels: High close, vulnerable to correction.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates easing, ETF flows slowing.
      • Cross: Stronger DXY, risk aversion, Nasdaq correlation.
      • Levels: Finding soft support after overnight retreat.

    Positioning watch: CFTC data shows crowded longs in AUD, USD, Copper, and Bitcoin, creating potential downside risk if data disappoints or risk sentiment shifts. Crowded shorts in JPY, GBP, and NZD present squeeze potential if risk appetite recovers.

    The pain trade: A surprise dovish signal from the Fed Chair Nomination Vote, coupled with weaker-than-expected US data later in the week, would trigger a sharp short squeeze in JPY, GBP, and NZD, while simultaneously hammering the USD.

  • Sterling Under Pressure as Political Uncertainty Intensifies – Tuesday, 12 May

    Where we are: Cable is currently trading around 1.3535, pressured by rising UK borrowing costs. The pair traded in a tight overnight range, failing to sustain a recovery from yesterday’s late weakness. This level sits below the prior NY close, reflecting ongoing selling pressure this morning. Immediate resistance is seen near 1.3580, with support around 1.3500.

    What’s driving it: Domestic political uncertainty is weighing heavily on the Pound. News that UK borrowing costs have surged to levels not seen since 1998, coupled with continued pressure on Prime Minister Starmer, is sapping investor confidence. This is compounded by the Bank of England’s cautious stance; the central bank held rates steady at 4.50% at its last meeting, with an 8-1 vote split reflecting a reluctance to commit to a dovish path. While US macro plays a role, it’s clearly second fiddle to the immediate UK situation here.

    • UK 10-year gilt yields are trading at their highest level since 1998, reflecting rising borrowing costs and investor nervousness.
    • Speculative positioning in GBP remains crowded short at the 15th percentile, increasing the risk of a squeeze if the political situation stabilizes.
    • BIS central bank speeches are focused on US monetary policy and digital assets, offering little immediate support for Sterling.

    NY session focus: All eyes on the 08:30 ET US CPI release. A stronger-than-expected print could further bolster the Dollar and weigh on Cable, testing the 1.3500 level. Conversely, a downside surprise might offer a temporary reprieve, potentially pushing Cable towards 1.3580. Keep an eye on the 11:59 ET Fed Chair Nomination Vote — a surprise outcome would ripple through markets. The trade that’s working is selling into rallies, while the risk lies in a sudden shift in UK political sentiment. The pain trade here? A Starmer reaffirmation triggering a short squeeze.

  • Footsie Under Pressure as Political Risks Mount – Tuesday, 12 May

    Where we are: The FTSE 100 is currently trading around 8,235, extending losses from yesterday’s close. The index has been under pressure in European morning trade, testing its six-week low, within an overnight range of roughly 8,210 – 8,280. This level is significantly below the prior NY close, indicating substantial negative sentiment.

    What’s driving it: Domestic political uncertainty is the primary driver, weighing on investor confidence. Rising pressure on Prime Minister Starmer after weak local election results has fueled concerns about political stability, overriding any positive signals from recent macro prints showing sticky inflation. While UK CPI remains elevated, with the headline at 3.3% YoY in March, and unemployment showing a slight dip to 4.9% in January, these figures are secondary to the immediate political headwinds. EQT’s ‘final’ offer for Intertek is providing some minor support, but is not enough to offset the broad market weakness. Falling US 10Y real yields could be seen as a constructive macro tailwind but the domestic uncertainty overrides that.

    • More than 70 Labour MPs are reportedly calling for Prime Minister Starmer to outline a timetable for his departure.
    • The FTSE 100 banks are seeing significant declines, with HSBC, Lloyds, Barclays, NatWest, and Standard Chartered all retreating.
    • Despite reporting earnings ahead of expectations, Vodafone shares are down over 2.5%.

    NY session focus: The US session will likely exacerbate existing trends, with risk sentiment heavily influenced by the political situation in the UK. Focus will be on how US equities react to the ongoing political risks, but the Footsie’s trajectory will largely be shaped by domestic factors. Watch for a potential test of the 8,200 level, a break of which could trigger further selling. Any positive news regarding UK political stability could provide a short-covering rally. The trade that’s working is shorting UK banks. The pain trade for the FTSE 100 is a sudden resolution to the political turmoil coupled with a resurgence in global risk appetite.

  • Guppy Strength Holds as BoJ Wary on Further Hikes – Tuesday, 12 May

    Snapshot: GBP/JPY trades near 192.80, unchanged from the overnight session. The BoJ’s cautious stance on further rate hikes, as reflected in the Summary of Opinions, underpins Yen weakness. No top-tier UK or US data scheduled before the NY close.

    • Watch 193.00; break would open the door to further gains driven by carry.
    • A surprise hawkish shift from Bailey this week could trigger a sharp reversal given crowded Yen shorts.

    Bias into NY: Bullish GBP/JPY while the BoJ maintains its measured approach to policy normalisation, targeting 193.50. US real yields softening may provide a tailwind for risk assets and support the cross.

  • NY Session Tactical Brief – Monday, 11 May

    Regime: Risk-off, with oil spiking on escalating Middle East tensions and Trump rejecting Iran’s peace offer, VIX at 17.08 and 10Y yields slightly higher.

    Today’s market themes:

    • Geopolitical Risk: Middle East tensions driving oil and safe-haven flows.
    • Rate Divergence: CB policy driving FX crosses, particularly EUR/GBP and EUR/JPY.
    • Commodity Strength: Silver and Copper continue to show strong performance.

    The setup: Geopolitical tensions are escalating quickly, pushing oil higher and boosting safe-haven demand. The market is pricing in a higher risk of supply disruptions from the Middle East. Watch for further headlines as the situation develops; a break above $105 in Brent could trigger a larger risk-off move. US 10Y yield is at 4.393%.

    Watch list (native time per event):

    • 09:30 CST CNY: CPI y/y (forecast 0.9%, prior 1.0%)
    • 09:30 CST CNY: PPI y/y (forecast 1.7%, prior 0.5%)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed watching data; US yields steady
      • Cross: Geopolitical risk-off; Euro weakness capping upside
      • Levels: Support: 97.80, Resistance: 98.03
    • EUR/USD:
      • Direction: Down
      • Domestic (EU): ECB divergence widening vs BoE and Fed
      • Cross: DXY strength / US-DE 10Y spread widening / Risk-off
      • Levels: Support: 1.1749, Resistance: 1.1782
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE hawkish hold / higher Gilt yields supporting
      • Cross: DXY / US-UK 10Y spread / Risk-off offsets domestic strength
      • Levels: Support: 1.3570, Resistance: 1.3616
    • USD/JPY:
      • Direction: Up
      • Domestic (JP): BoJ dovish / JGB yields capped / Intervention watch
      • Cross: Higher US 10Y yield / DXY / risk regime
      • Levels: Support: 156.76, Resistance: 157.18
    • USD/CAD (Loonie):
      • Direction: Up
      • Domestic (CA): BoC dovish / WTI strength offset by CAD weakness
      • Cross: DXY / US-CA 10Y spread
      • Levels: Support: 1.3661, Resistance: 1.3695
    • AUD/USD (Aussie):
      • Direction: Down
      • Domestic (AU): RBA neutral / China data sensitivity
      • Cross: DXY strength / US-AU 10Y / China growth uncertainty
      • Levels: Support: 0.7220, Resistance: 0.7249
    • NZD/USD (Kiwi):
      • Direction: Down
      • Domestic (NZ): RBNZ dovish / dairy prices lackluster
      • Cross: DXY strength / US-NZ 10Y / risk-off sentiment
      • Levels: Support: 0.5939, Resistance: 0.5957
    • USD/CHF (Swissy):
      • Direction: Up
      • Domestic (CH): SNB dovish / Swiss yields low
      • Cross: DXY strength / safe-haven unwinding
      • Levels: Support: 0.7774, Resistance: 0.7795
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Down; EUR/JPY: Up; GBP/JPY: Up
      • Domestic: EUR/GBP: BoE vs ECB; EUR/JPY & GBP/JPY: rate divergence
      • Cross: DXY / risk regime / cross-of-crosses dynamics
      • Levels: EUR/GBP: 0.8647/0.8668; EUR/JPY: 184.39/185.02; GBP/JPY: 212.73/213.87
    • XAU (Gold):
      • Direction: Down
      • Domestic (asset-specific): Rising real yields / ETF outflows
      • Cross: DXY strength / risk-off demand limited
      • Levels: Support: 4655.6, Resistance: 4714.2
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand / Gold strength
      • Cross: DXY / risk regime
      • Levels: Support: 7953.000, Resistance: 8418.000
    • WTI / Brent:
      • Direction: Up
      • Domestic (asset-specific): Geopolitical risk / potential supply disruption
      • Cross: DXY / risk regime
      • Levels: WTI: Support: 96.64, Resistance: 100.35; Brent: Support: 102.90, Resistance: 105.97
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China stimulus / LME stock levels
      • Cross: DXY / global growth proxy
      • Levels: Support: 625.4000, Resistance: 641.4300
    • SPX:
      • Direction: Down
      • Domestic (US): higher yields / earnings plateau
      • Cross: VIX rising / global risk aversion
      • Levels: Futures support: 7391.00, Resistance: 7420.25, Cash support: 7398.90
    • NDX:
      • Direction: Down
      • Domestic (US): Real yields / AI bubble potential
      • Cross: Rates sensitive / Rising VIX
      • Levels: Futures support: 29227.50, Resistance: 29399.25
    • US30 (Dow):
      • Direction: Down
      • Domestic (US): Cyclical rotation out / yields impact
      • Cross: bond-yield reaction
      • Levels: Futures support: 49471, Resistance: 49706
    • UK100 (FTSE):
      • Direction: Down
      • Domestic (UK): Sterling strength / Gilt yields rising
      • Cross: global risk aversion / US tone
      • Levels: Support: 22742, Resistance: 22850
    • DAX:
      • Direction: Down
      • Domestic (DE): Lower Bund yields / weaker outlook
      • Cross: US tech weakness / DXY / risk regime
      • Levels: Support: 24204, Resistance: 24362
    • Nikkei:
      • Direction: Down
      • Domestic (JP): Strong JPY / JGB yields rising slightly
      • Cross: US tech weakness / risk regime
      • Levels: Support: 62393, Resistance: 63385
    • BTC:
      • Direction: Down
      • Domestic (asset-specific): Crowded longs / Funding rates high
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support: 62393, Resistance: 63385

    Positioning watch: AUD/USD and Bitcoin are crowded longs (96th and 83rd percentile, respectively), making them vulnerable to a squeeze lower on any disappointment or USD strength. GBP and JPY are crowded shorts, a positive surprise could trigger a squeeze higher.

    The pain trade: A surprise de-escalation in Middle East tensions combined with a dovish signal from the Fed would trigger a massive short squeeze in USD/JPY and GBP/USD, while simultaneously crushing oil prices and unwinding crowded long positions in AUD and BTC.

  • Sterling Buoyed by Gilts, Braces for US Data – Monday, 11 May

    Where we are: GBP/USD currently trades at 1.3606, up 0.26% on the session, testing the upper end of its intraday range of 1.3570-1.3616. Cable has shrugged off earlier weakness in European equities to maintain a bid, though the DXY remains largely flat. The pair is attempting to break higher from Friday’s close, with the 1.3620 level representing immediate resistance.

    What’s driving it: The primary driver for Sterling remains domestic, with a modest steepening of the UK gilt curve supporting the currency. The UK 10Y yield has edged up to 5.001%, a 7bp rise, reflecting some recalibration after last week’s dovish repricing following the BoE’s hold. While the central bank is holding rates at 4.50%, the 8-1 vote split (Dhingra dissenting for a cut) highlights the internal debate; markets are sensitive to any indications of a shift in the MPC’s cautious, data-dependent stance.

    • The upward move in the UK 10Y yield (+7bp) is outpacing the US 10Y (+0.2bp), narrowing the US-UK 10Y spread to -61bp, a tailwind for GBP/USD.
    • Speculative positioning remains crowded short GBP, with net non-commercial positions at -63,908 contracts (15th percentile), increasing squeeze risk on any further positive surprises.
    • The drop in UK unemployment to 4.9% (as of January) continues to support the view that the labour market remains relatively tight, making the BoE more hesitant to cut rates aggressively.

    NY session focus: The primary focus for the New York session will be any read-across from US data on the UK outlook. Traders should watch for reactions to incoming releases, specifically for how the data influences the dollar and risk sentiment. Key levels to watch are 1.3570 as intraday support and 1.3620 as immediate resistance; a break above the latter could open the way to 1.3650. The working trade is buying dips in Cable against the backdrop of short positioning. The pain trade for GBP/USD is a hawkish repricing of Fed expectations combined with a deterioration in UK economic data.

  • FTSE 100 Under Pressure as Gilt Yields Spike – Monday, 11 May

    Where we are: The FTSE 100 is currently trading at 22749, down 101 points or 0.44% on the day. The index is trading towards the lower end of its intraday range of 22742-22850, failing to hold ground after the brief overnight bounce. It is underperforming European peers, which are seeing slightly less dramatic declines, and is looking vulnerable as it tests intraday lows.

    What’s driving it: The primary driver of the FTSE’s weakness is the spike in UK gilt yields. The UK 10-year gilt yield has jumped 7 basis points to 5.001%, reflecting concerns about persistent inflation after stronger-than-expected CPI prints in March showed headline inflation at 3.3% and CPIH at 3.4%. The lack of progress on core inflation, remaining steady at 3.2%, suggests that domestic inflationary pressures remain sticky. Global factors are secondary, but US 10-year yields holding steady at 4.393% isn’t offering any relief, while a slightly stronger DXY around 97.87 adds some minor headwinds.

    • UK 10Y Gilt yield at 5.001% (+7bp) — a clear signal that fixed-income investors are demanding higher compensation for inflation risk.
    • UK CPI remains elevated, with the headline number climbing to 3.3% YoY.
    • FTSE underperforming DAX and CAC 40, suggesting UK-specific concerns are at play.

    NY session focus: With no major UK data releases scheduled, the FTSE will likely be driven by broader risk sentiment and US market movements. Watch for any signs of stabilization in gilt yields, which could provide some support. Key levels to watch are 22700 as immediate support and 22850 as resistance. A break below 22700 could trigger further selling. The trade that’s working is shorting the FTSE on any rallies. The trade at risk is long FTSE, hoping for a quick turnaround. The pain trade would be a sudden dovish shift from the Bank of England, reversing the yield spike and triggering a sharp rally.

  • Guppy Firms on Gilt Yields, Eyes Further Gains – Monday, 11 May

    Snapshot: GBP/JPY trades at 213.78, up 0.49% on the session. UK 10Y Gilt yields have climbed 7bp to 5.001%, providing support to the Pound. No major UK data is due before the NY close.

    • Watch 214.00 for a potential break higher; a sustained push above this level would signal further upside momentum.
    • Risk of Yen weakness abating if the Nikkei selloff continues to unnerve investors.

    Bias into NY: Bullish on GBP/JPY above 213.50, driven by the prospect of continued yield support and BoJ caution. The path of least resistance appears to be toward 214.50.

  • NY Session Tactical Brief – Friday, 8 May

    Regime: Risk-on, as equity futures surge on hopes of softer US payrolls and bond yields drift lower (US 10Y at 4.357%).

    Today’s market themes:

    • US Payrolls showdown: markets bracing for a potential dovish surprise amid a crowded USD long positioning.
    • Iran tensions: Oil prices remain volatile amid geopolitical instability and supply concerns.
    • Central Bank Divergence: Focus on Lagarde and Bailey speeches while watching BoJ comments regarding JPY.

    The setup: The market is pricing in a weaker-than-expected US jobs report, fueling a rally in risk assets. The crowded USD long position leaves room for a significant squeeze if the data disappoints. Watch US 10Y yield response to payrolls and the DXY level around 97.77.

    Watch list (native time per event):

    • 08:30 ET USD: Non-Farm Employment Change (forecast 65K, prior 178K)
    • 08:30 ET CAD: Employment Change (forecast 12.9K, prior 14.1K)
    • 13:20 London GBP: BOE Gov Bailey Speaks

    Bias by asset:

    • DXY:
      • Direction: Bearish.
      • Domestic (US): Fed policy outlook dependent on US data, especially labor market.
      • Cross: Risk sentiment dependent on USD strength, FX cross flows.
      • Levels: Support at 97.50, resistance at 98.20.
    • EUR/USD:
      • Direction: Bullish.
      • Domestic (EU): ECB’s rhetoric, core inflation and German Bund yields.
      • Cross: DXY weakness, US-DE 10Y spread favoring EUR, positive risk sentiment.
      • Levels: Support at 1.1700, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Bullish.
      • Domestic (UK): BoE policy guidance, Gilt yields, services CPI.
      • Cross: DXY weakness, US-UK 10Y spread, risk on sentiment.
      • Levels: Support at 1.3550, resistance at 1.3650.
    • USD/JPY:
      • Direction: Neutral.
      • Domestic (JP): BoJ policy, JGB yield curve control, intervention threat.
      • Cross: US 10Y yields, DXY direction, risk appetite.
      • Levels: Support at 156.00, resistance at 157.00.
    • USD/CAD (Loonie):
      • Direction: Neutral.
      • Domestic (CA): BoC policy, Employment change data and WTI correlation.
      • Cross: DXY direction, US-CA 10Y yield spread.
      • Levels: Support at 1.3600, resistance at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bullish.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, US-AU 10Y spread, China growth outlook.
      • Levels: Support at 0.7200, resistance at 0.7250.
    • NZD/USD (Kiwi):
      • Direction: Bullish.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, US-NZ 10Y spread, risk appetite.
      • Levels: Support at 0.5900, resistance at 0.5975.
    • USD/CHF (Swissy):
      • Direction: Bearish.
      • Domestic (CH): SNB stance and Swiss yield curve.
      • Cross: DXY weakness, safe-haven demand.
      • Levels: Support at 0.7750, resistance at 0.7810.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish.
      • Domestic: Relative CB policy, relative yield spreads drive direction.
      • Cross: DXY, risk regime, cross-of-crosses dynamics.
      • Levels: Watch key technical levels, sensitive to GBP and JPY crosses.
    • XAU (Gold):
      • Direction: Bullish.
      • Domestic (asset-specific): Real yields trending lower, rising breakevens, central bank demand.
      • Cross: DXY weakness, risk-off sentiment.
      • Levels: Support at 4700, resistance at 4750.
    • XAG (Silver):
      • Direction: Bullish.
      • Domestic (asset-specific): Industrial demand expectations, gold-silver ratio.
      • Cross: DXY weakness, risk appetite.
      • Levels: Support at 8100, resistance at 8200.
    • WTI / Brent:
      • Direction: Mixed.
      • Domestic (asset-specific): Iran tensions, EIA inventory data, OPEC output levels.
      • Cross: DXY, risk sentiment.
      • Levels: Watch inventory reports, supply disruptions.
    • Copper:
      • Direction: Bullish.
      • Domestic (asset-specific): Positive China growth outlook, LME stocks, supply issues.
      • Cross: DXY, global growth.
      • Levels: Support at 625, resistance at 635.
    • SPX:
      • Direction: Bullish.
      • Domestic (US): Earnings season, Fed policy outlook, US yield reaction.
      • Cross: VIX suppression, global sentiment.
      • Levels: Futures resistance at 7420, cash support 7330.
    • NDX:
      • Direction: Bullish.
      • Domestic (US): Mega-cap tech earnings, real yields and AI investments.
      • Cross: Rates sensitivity, low VIX environment.
      • Levels: Support at 28800, resistance at 29000.
    • US30 (Dow):
      • Direction: Bullish.
      • Domestic (US): Industrial earnings, cyclical sentiment.
      • Cross: Bond yields response.
      • Levels: Support at 49500, resistance at 50000.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk, and US macro performance.
      • Levels: Support at 22800, resistance at 22950.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): German Bund yields and broader Eurozone sentiment.
      • Cross: US Tech, DXY, risk appetite.
      • Levels: Support at 24400, resistance at 24550.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY strength sensitivity, JGB yields, BoJ policy.
      • Cross: US tech, global risk appetite.
      • Levels: Support at 62500, resistance at 62800.
    • BTC:
      • Direction: Neutral.
      • Domestic (asset-specific): ETF inflows, on-chain activity, funding rate.
      • Cross: DXY direction, risk sentiment, and Nasdaq correlation.
      • Levels: Support at $79,000, resistance at $80,500.

    Positioning watch: USD, AUD and BTC are crowded longs, S&P, Nasdaq, GBP, JPY and NZD are crowded shorts. A strong payrolls number will amplify the USD short squeeze while a weak number risks a violent short squeeze in GBP, JPY and Nasdaq.

    The pain trade: A strong US jobs report would trigger a massive USD rally, crush risk assets, and inflict maximum pain on the crowded short positions in GBP, JPY and tech stocks.

  • Pound Firms as Gilts Rally Post-Election – Friday, 8 May

    Where we are: GBP/USD currently trades at 1.3621, up 0.52% on the day, trading near the top of its intraday range of 1.3547-1.3624. Cable has caught a solid bid during the European morning, extending gains from yesterday’s close above 1.3550. The pair is testing levels not seen in over two months as Sterling outperforms against the backdrop of easing political concerns and softer UK yields.

    What’s driving it: Sterling is finding support from a rally in UK gilts after local election results showed that Prime Minister Starmer’s Labour Party losses were less severe than feared. This has eased some political uncertainty that had been weighing on the currency. While the Bank of England held rates steady at 4.50% at the last meeting, the market is still pricing in some tightening by year end, giving the Pound a bid on any sign of political stability. The US 10-year yield falling to 4.357% is also applying downward pressure on the Dollar, supporting GBP/USD.

    • UK 2-year gilt yields are down 8bp on the day, signalling a softening in near-term rate expectations post-election results.
    • Net non-commercial GBP positioning remains crowded short at -60,639 contracts, representing the 15th percentile of the 52-week range, suggesting squeeze potential if the current bullish trend continues.
    • The Market Participants Group meeting minutes released this morning show the BoE is actively engaging with market participants on relevant themes, signaling their sensitivity to market sentiment.

    NY session focus: The key event for the session will be the US jobs data at 08:30 ET, where the market is expecting Non-Farm Payrolls of 65k and an Unemployment Rate of 4.3%. A weaker-than-expected print could send US yields lower and fuel further GBP/USD upside, potentially targeting 1.3650. A strong print, however, could see Cable retrace towards 1.3580. Later at 13:20 London, keep an ear on any remarks from BOE Gov Bailey, in case it introduces any Sterling volatility. The pain trade for GBP/USD is a sustained break above 1.3650, triggering a significant short squeeze.

  • FTSE Recovers Ground as Gilt Yields Ease – Friday, 8 May

    Where we are: The FTSE 100 is currently trading at 22888, up 87 points or 0.38% on the day, having traded in a range of 22684-22939. The index is attempting to build on yesterday’s rebound, spurred by easing UK gilt yields. The Footsie remains below intraday highs printed earlier this morning, and is positioned to challenge the overnight high heading into the NY open.

    What’s driving it: Domestic gilt yields are providing the primary impetus, with the UK 2-year yield down 8bp to 4.317% and the 10-year down 5bp to 4.879%. The Bank of England’s Market Participants Group meeting minutes released this morning is unlikely to impact market sentiment, but traders will be looking for any colour Governor Bailey might offer later in the session. The move is amplified by a softer dollar, with the DXY currently at 97.77.

    • UK 2Y yields are down 8bp, reflecting a possible dovish shift in rate expectations.
    • The FTSE 100 outperformed European peers, potentially indicating relative value given the improved UK macro picture.
    • The 2s10s curve has steepened, which may reflect a reassessment of the UK’s long-term growth outlook.

    NY session focus: All eyes will be on BOE Gov Bailey’s speech at 13:20 London. Watch for any comments on the recent CPI figures and the path of future rate hikes. Key levels to watch include resistance around 22950, with a break above potentially opening the door to a test of 23000. Support lies at 22700. The trade that’s working is long FTSE on dips, but the risk is a hawkish surprise from Bailey sending gilt yields higher and weighing on the index. The pain trade is a dovish Bailey catalysing a major risk-on move, leaving Footsie lagging Wall Street.

  • Sterling/Yen Extends Gains as Gilts Recover – Friday, 8 May

    Snapshot: GBP/JPY trades at 213.25, up 0.33% on the session, driven by a recovery in UK yields following yesterday’s dip. All eyes are now on BOE Governor Bailey’s speech at 13:20 London for clues on the Bank’s near-term policy intentions.

    • UK 2-year yields have rebounded, down 8bp to 4.317%, providing support for the Pound.
    • Risk sentiment remains positive, but volatility could increase around Bailey’s comments; hawkish signals could fuel further upside while dovish hints may trigger a quick reversal.

    Bias into NY: The bias is cautiously bullish, targeting 213.50, contingent on Bailey maintaining a hawkish stance and UK yields holding their ground. A softer dollar, with the DXY at 97.77, offers additional tailwinds.

  • NY Session Tactical Brief – Thursday, 7 May

    Regime: Mixed, with VIX holding steady at 17.38 and US yields slightly lower, suggesting a cautious risk-on sentiment tempered by geopolitical tensions.

    Today’s market themes:

    • Mideast Peace Potential: Easing oil supply concerns dominate, pressuring crude and boosting risk assets.
    • Dollar Weakness: DXY continues its descent, supporting EUR, GBP, AUD, and gold.
    • Earnings Rotation: Focus shifts to industrial and financial earnings in the US after tech-led rally.

    The setup: Markets are pricing in a higher probability of a Middle East peace deal, driving WTI down nearly 6% to $90.21. This is providing a tailwind for risk assets, especially equities. However, crowded positioning in USD and Aussie could trigger a squeeze on any hawkish surprises. Watch US Unemployment Claims at 08:30 ET.

    Watch list (native time per event):

    • 08:30 ET USD: Unemployment Claims (forecast 205K, prior 189K)
    • 10:00 ET USD: Factory Orders (prior 0.8%)
    • 14:00 BST GBP: BoE’s Breeden speaks on Inflation

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): Fed likely to remain cautious; watch claims data.
      • Cross: Risk-on sentiment weighing; EUR and GBP strength.
      • Levels: Resistance at 97.90, support at 97.65.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, positive risk sentiment, US-DE 10Y widening.
      • Levels: Support at 1.1740, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, boosted by positive risk sentiment.
      • Levels: Support at 1.3590, resistance at 1.3650.
    • USD/JPY:
      • Direction: Neutral
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response.
      • Cross: US 10Y stable, risk-on environment, intervention risk high.
      • Levels: Support at 156.00, resistance at 156.50.
    • USD/CAD (Loonie):
      • Direction: Down
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: WTI weakness, DXY direction, US-CA 10Y spread.
      • Levels: Support at 1.3620, resistance at 1.3650.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, China growth optimism.
      • Levels: Support at 0.7230, resistance at 0.7270.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, positive risk sentiment.
      • Levels: Support at 0.5950, resistance at 0.5990.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, safe-haven outflows into risk-on.
      • Levels: Support at 0.7770, resistance at 0.7800.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY up, GBP/JPY up
      • Domestic: Relative hawkishness of BoE priced in; BoJ dovish.
      • Cross: Risk-on favoring JPY crosses; DXY impact on EUR/GBP.
      • Levels: Monitor ranges, relative yield direction key.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Rising as breakevens rise; CB demand supportive.
      • Cross: DXY weakness, safe haven demand diminishing.
      • Levels: Support at 4700, resistance at 4765.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand supportive.
      • Cross: DXY weakness, positive risk sentiment.
      • Levels: Support at 8000, resistance at 8250.
    • WTI / Brent:
      • Direction: Down
      • Domestic (asset-specific): Peace deal/higher supply.
      • Cross: DXY strength would add to move lower; risk aversion would add to move lower.
      • Levels: Support at 90.00, resistance at 96.00.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China rebound expectations/LME-stock
      • Cross: Global growth proxy; Dollar strength a headwind
      • Levels: Support at 615, resistance at 625
    • SPX:
      • Direction: Up
      • Domestic (US): Earnings momentum; rates stabilize.
      • Cross: Positive global tone, VIX suppression.
      • Levels: Futures support at 7380, resistance at 7410, cash support 7300.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap tech earnings supportive/ AI narrative.
      • Cross: Lower rates sensitivity, high beta.
      • Levels: Resistance at 28800, support 28600.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Rebound in industrial earnings; cyclical shift.
      • Cross: Responding positively to bond-yield relief.
      • Levels: Resistance near 50200, support at 49900.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk, benefiting from oil decline.
      • Levels: Support at 22800, resistance at 23000.
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields stable; weak economic data.
      • Cross: Watching US tech strength; risk-on sentiment.
      • Levels: Support at 24850, resistance at 25000.
    • Nikkei:
      • Direction: Up
      • Domestic (JP): JPY weakness driving earnings.
      • Cross: Catching up with US tech performance; risk-on buying.
      • Levels: Support at 62000, resistance at 63000.
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flow-dependent, funding elevated.
      • Cross: risk-regime, positive overall, high correlation to tech.
      • Levels: Support at 80500, resistance at 81700.

    Positioning watch: CFTC data shows crowded longs in AUD, Copper, and Bitcoin (>90th percentile) and crowded shorts in JPY, GBP, and Nasdaq (

    The pain trade: A hawkish surprise from the US Unemployment Claims, triggering a USD rally and sending risk assets lower, would hurt the most positions.

  • Cable Breaks Higher, Targeting 1.3700 as DXY Weakens – Thursday, 7 May

    Where we are: GBP/USD is currently trading at 1.3626, up 0.25% on the day and testing the upper end of its intraday range (1.3590-1.3631). Sterling has gained ground during the European session, breaking above previous resistance levels. The move builds on yesterday’s gains and positions Cable to test 1.3650 resistance, before a run at the 1.3700 level.

    What’s driving it: Sterling’s rally is primarily driven by dollar weakness, amplified by the risk-on sentiment evident in equity markets. Domestically, the market is quiet ahead of tomorrow’s Bank of England meeting. The MPC’s cautious stance, reinforced by the 8-1 vote to hold rates steady at 4.50% at the last meeting, keeps the market on edge, particularly given sticky services CPI. The upcoming MPC meeting will be critical, even if no move is expected: any shift in rhetoric towards a more dovish outlook, especially given Dhingra’s dissent, would be quickly priced in.

    • UK 2Y yields have softened slightly, down 4bp to 4.320%, reflecting the market’s anticipation of a potential shift in the BoE’s policy stance.
    • Crowded short positioning in GBP, evidenced by the -60,639 net non-commercial contracts, raises the risk of a squeeze, particularly if tomorrow’s MPC minutes surprise to the hawkish side or the data flow improves.
    • The FTSE 100’s outperformance (+0.61%) relative to European peers suggests some domestic resilience, adding to the positive sentiment surrounding Sterling.

    NY session focus: The main event for the US session is the 08:30 ET Unemployment Claims release. A higher-than-forecast print (above 205K) could exacerbate existing dollar weakness, pushing Cable higher. Conversely, a print below 189K would likely see a retracement back towards 1.3600. Keep an eye on US 10Y yields – a continued decline below 4.30% would support the risk-on move and benefit GBP. The working trade is to play Cable long above 1.3600, targeting 1.3700. A break below 1.3590 negates the bullish view. The pain trade for Sterling is a surprise hawkish signal from the BoE coupled with a recovery in the dollar driven by strong US data.