Category: UK

  • 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.

  • Sterling Edges Higher, Rate Hike Expectations Support – Tuesday, 2 June

    Where we are: GBP/USD is currently trading at 1.3473, up 0.12% on the day, within a relatively tight intraday range of 1.3451-1.3482. The pair is holding ground above its prior NY close, benefitting from a slightly softer dollar and continued expectations of Bank of England rate hikes. Price action suggests the upper end of this range is being tested, and a break could target intraday highs.

    What’s driving it: Sterling is finding support from expectations that the Bank of England will deliver at least one, and possibly two, interest rate hikes this year. The market is pricing in a high probability of the first hike occurring in September. While recent UK CPI figures have shown a moderating trend (headline at 2.8%, core at 2.5%), the MPC remains cautious due to persistent strength in services CPI (near 5%) and resilient wage growth, making them reluctant to fully commit to a dovish path. The US-UK 10Y yield spread sits at -40bp, further supporting the currency.

    • The Bank of England’s last decision on March 20th saw rates held at 4.50% with an 8-1 vote, suggesting a hawkish lean.
    • CFTC data shows a crowded short position in GBP, with net non-commercial positions at -61,398 contracts, in the 19th percentile, increasing squeeze risk.
    • The UK 2s10s curve is steep at +56bp, hinting at potential future growth concerns but, for now, reflecting the premium being placed on near-term policy tightening.

    NY session focus: Traders will be closely watching 10:00 ET JOLTS Job Openings data in the US which will impact USD. Later, all eyes turn to 15:00 London when BOE Gov Bailey speaks, which could offer further insight into the MPC’s thinking. Key levels to watch on the upside are the intraday high of 1.3482, and beyond that, 1.3500. On the downside, support lies around 1.3450. The current trade is to buy dips in Cable while the hawkish BoE narrative holds. The pain trade is a surprisingly dovish Bailey that forces shorts to cover aggressively, squeezing Cable towards 1.3600.

  • FTSE 100 Grinds Higher Despite Gilts; Bailey Looms – Tuesday, 2 June

    Where we are: The FTSE 100 is currently trading at 23358, up 110 points or +0.47% on the day. The index has traded in a range of 23248-23494 thus far. This level is modestly higher than yesterday’s close, driven by continued strength from miners. Resistance is seen at the intraday high of 23494.

    What’s driving it: UK CPI data released last month showed a significant drop in inflation, with headline CPI falling to 2.8%. This, alongside a slight rise in unemployment to 5%, is easing pressure on the Bank of England to maintain its hawkish stance. UK 10-year Gilts have edged down 5bp to 4.830%, while the 2-year yield remains unchanged at 4.274%, steepening the 2s10s curve to +56bp. The weakening in Gilts is not weighing on the FTSE, with commodity strength providing a buffer, although Gov Bailey’s speech at 15:00 London could trigger a reaction.

    • The 0.5% drop in UK CPI YoY in April, along with a 0.7% drop in Core CPI YoY, signals easing inflationary pressures and potentially reduces the urgency for further rate hikes.
    • The rise in UK unemployment to 5% suggests a softening labor market, further supporting a more dovish outlook.
    • Despite the positive move in FTSE, British American Tobacco is down over 3%, diverging from the broader index and indicating sector-specific weakness.

    NY session focus: Traders should watch for further developments regarding BoE Governor Bailey’s speech at 15:00 London, as his remarks could significantly impact both Sterling and the FTSE 100. Key levels to watch are resistance at 23494 and support around 23248. S&P 500 futures trading slightly lower (-0.14%) pre-NY open suggest a mildly risk-off tone which could limit further upside for the FTSE. The trade working is still riding the commodity strength, but is vulnerable to a hawkish Bailey surprise. The pain trade is a sharp dovish repricing in the UK curve combined with a weaker pound which pressures domestically focussed names.

  • Sterling/Yen Range Break Looms as BoE Stays Cautious – Tuesday, 2 June

    Snapshot: GBP/JPY is trading at 215.26 (+0.20%) after a quiet overnight session. The pair is underpinned by the Bank of England’s cautious stance, with the MPC reluctant to signal a cut path. All eyes are on BoE Gov Bailey’s speech at 15:00 London, with markets keen for any further clues on the Bank’s thinking.

    • Watch for a break above intraday highs of 215.32, which would open a path to test recent peaks.
    • A hawkish surprise in Bailey’s comments could see the pair squeeze shorts given current positioning.

    Bias into NY: Mildly bullish, with potential for further upside if Bailey reiterates the data-dependent stance; a push above 215.50 would confirm momentum, with US yields currently offering only a modest headwind.

  • 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.

  • Cable’s Rally Stalls at 1.3475 Resistance – Monday, 1 June

    Where we are: GBP/USD is trading at 1.3456, marginally lower on the day (-0.01%). Cable has traded in a tight 1.3446-1.3476 range so far today. This level is just below Friday’s close. Resistance is likely to be found at the intraday high and then psychological resistance at 1.35.

    What’s driving it: Sterling is struggling to find direction as the market digests recent UK data. The Bank of England’s cautious stance, underscored by the 8-1 vote to hold rates at 4.50% last month, continues to restrain the Pound. While April’s CPI data showed a welcome decline, services CPI remains stubbornly high, keeping the MPC on edge. The slight widening of the US-UK 10Y yield spread to -38bp isn’t helping sentiment either, although the rise in FTSE 100 may provide the floor.

    • BoE Governor Bailey’s interview transcript will be parsed for any shifts in the central bank’s outlook.
    • UK unemployment ticking up to 5.0% in February is a potential warning sign that could sway the MPC to a more dovish stance if it continues.
    • Crowded short GBP positions – net non-commercials at -61,398 contracts – suggest that any positive surprise could trigger a squeeze.

    NY session focus: The main focus for the New York session will be the 10:00 ET ISM Manufacturing PMI release. A strong print above 53.3 could fuel further USD strength and weigh on Cable, while a miss could provide Sterling with a much-needed boost. We’ll also hear from FOMC Member Powell at 20:30 ET — any hawkish rhetoric would further pressure GBP/USD. Key levels to watch are 1.3440 for support and 1.3476 for resistance. The trade is to fade this rally and look for 1.3440, and the risk is to short the rally.

  • FTSE Faces Pressure as Disinflation Trend Falters – Monday, 1 June

    Where we are: The FTSE 100 is currently trading at 23377, down 52 points or 0.22% on the day. The index is holding above the lower end of its intraday range of 23352-23429, but is lagging the broader European rally. The Footsie closed its last NY session near 23,400.

    What’s driving it: The FTSE is underperforming its European peers, feeling pressure from a somewhat mixed domestic picture. The latest inflation data, while showing a decrease in headline CPI to 2.8%, may not be enough to inspire confidence that the Bank of England will cut rates aggressively, particularly with unemployment ticking up to 5%. Meanwhile, a firmer dollar, with the DXY at 99.06, adds to the pressure, weighing on the relative value of FTSE-listed multinationals’ overseas earnings.

    • UK CPI printed 2.8% YoY versus a prior of 3.3%, suggesting disinflation is ongoing, albeit more slowly than hoped.
    • The UK unemployment rate edged up to 5%, a potential warning sign for the domestic economy.
    • The FTSE is diverging from the DAX (+0.80%) and CAC 40 (+0.61%), pointing to specific UK-related headwinds.

    NY session focus: The US session will be crucial in determining whether the FTSE can regain some ground. Keep an eye on US 10-year yields, currently at 4.452%, as any further downside pressure could provide a tailwind. The key level to watch on the FTSE is 23350 – a break below could trigger further selling. The trade that’s working is shorting FTSE versus long DAX, while the trade at risk is dip-buying UK housebuilders on the back of the Nationwide data. Watch for the 08:30 ET US data — any surprises could spark volatility across global markets. The pain trade for the FTSE 100 is a sharp reversal in Sterling alongside a renewed global risk-on move.

  • Guppy Remains Bid on BoJ Patience – Monday, 1 June

    Snapshot: GBP/JPY trades at 214.65, up +0.10% today, driven by the BoJ’s continued slow normalisation bias. Wage data supports further hikes, but Governor Ueda’s patient stance underpins the Yen’s weakness. The DXY is firmer at 99.06.

    • Watch for resistance around 215.00, a break above which could trigger further upside given the current momentum.
    • Risk of a surprise intervention from the BoJ should Yen weakness accelerate too far, particularly if it tests prior intervention zones.

    Bias into NY: Bullish on GBP/JPY, as the BoJ’s measured approach to policy normalisation contrasts with the BoE’s data-dependent caution; a break above 214.88 looks likely. US 10Y yields are modestly lower at 4.452%, offering little resistance to the cross.

  • Guppy Rides BoJ Patience, UK Data Pullback – Monday, 1 June

    Snapshot: GBP/JPY trades at 214.72, up 0.13% on the day. A pullback in UK CPI figures released in April has slightly reduced pressure on the BoE to cut, while the Bank of Japan’s steady hand provides a foundation for Guppy strength as the market looks towards further BoJ policy decisions.

    • Watch for rallies toward 215.00.
    • A sharp risk-off move in US equities could trigger Yen buying and unwind some GBP/JPY gains.

    Bias into NY: We favour further upside in GBP/JPY, contingent on risk sentiment remaining constructive. The setup favours a test of intraday highs near 214.88 and potentially a push towards 215.00, bolstered by the BoJ’s current policy stance.

  • 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.

  • Cable Pressured by Bailey’s Dovish Undertones – Friday, 29 May

    Where we are: GBP/USD trades at 1.3428, down 0.12% on the day, within a tight 1.3409-1.3450 range. The pair is struggling to hold gains after a brief push higher in early European trading. We remain below yesterday’s New York close, suggesting continued downward pressure.

    What’s driving it: Governor Bailey’s remarks this morning are weighing on Sterling, reinforcing the Bank of England’s cautious stance. Bailey suggested tolerance for inflation above the 2% target given the soft real economy. This dovish tilt comes despite recent CPI figures that show inflation remains sticky, particularly in the services sector, and resilient wage growth that is keeping the MPC from signalling a clear cutting cycle. The dollar is catching a bid, with DXY at 99.01 (+0.07%), which adds further pressure on Cable.

    • Bailey’s tolerance for above-target inflation signals a potential delay in rate hikes, contrasting with earlier expectations.
    • UK unemployment rate ticked up to 5% in February, a lagging indicator of economic slowdown.
    • CFTC data shows a crowded short GBP positioning (-64,307 contracts, 15th percentile), suggesting squeeze potential on any positive surprise.

    NY session focus: Traders will be watching for any further reaction to Bailey’s comments. Focus remains on how resilient the US economy feels into the close. US 2s10s curve is +46bp. Key levels to watch are 1.3400 for support and 1.3450 as intraday resistance. The trade that’s working is fading Cable rallies. The crowded short positioning presents a notable squeeze risk if the BoE rhetoric pivots hawkishly. The pain trade is a hawkish Bailey U-turn and a sustained break above 1.3500, triggering short covering.

  • FTSE 100 Outperforms on Gilts and M&A Chatter – Friday, 29 May

    Where we are: The FTSE 100 is currently trading at 23469, up 142 points or 0.61% on the day, trading in a range of 23327 to 23552. This puts it well above yesterday’s New York close, driven by a continued bid tone in early European trading. The index is testing the upper end of its recent range, with resistance around 23550.

    What’s driving it: UK yields are drifting lower, with the 2-year down 3bp at 4.219% and the 10-year down 2bp at 4.803%. This is providing a tailwind for equities. The recent drop in CPI, with the headline figure falling to 2.8%, is giving the market confidence that the Bank of England may be closer to easing. Later today, all eyes will be on the comments from BOE Governor Bailey at 09:20 London time, where any hints of dovishness could further fuel the rally. While the DXY is slightly firmer at 99.01, the primary driver here remains domestic.

    • UK CPI printed well below prior levels, indicating easing inflationary pressure.
    • The UK 2s10s curve remains steep at +58bp, reflecting market expectations for future rate cuts.
    • M&A speculation is swirling around several FTSE 100 constituents, adding to the positive sentiment.

    NY session focus: The US session will likely focus on how the FTSE reacts to the US data stream next week, but today will likely be a continuation of the current trend. Watch for any signs of profit-taking as the index approaches the 23600 level. Key levels to watch are 23350 as initial support and 23550 as resistance. The trade is long UK equities against a backdrop of falling yields and dovish BoE expectations. The risk is a hawkish surprise from Governor Bailey, which would likely trigger a sharp pullback. The pain trade is a breakout above 23600, forcing shorts to cover and exacerbating the rally.

  • Guppy Remains Under Pressure on BoE Policy Divergence – Friday, 29 May

    Snapshot: GBP/JPY trades at 213.87, down -0.11% on the session. The primary driver remains the divergence between the Bank of England’s cautious stance and the Bank of Japan’s slow normalisation bias. All eyes on BOE Gov Bailey speaking at 09:20 London.

    • Watch 213.59 – intraday low. Break below opens a test of 213.00.
    • BoE Gov Bailey’s comments could trigger volatility; hawkish signals could trigger a short squeeze.

    Bias into NY: Short GBP/JPY, targeting 213.00, as downside pressure persists on BoE’s reluctance to commit to rate cuts; the relatively stronger performance of the Nikkei 225 (+1.79%) and a bid in the FTSE 100 (+0.61%) suggest risk sentiment isn’t a deterrent to the carry trade.

  • 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.

  • Pound Pressured by UK Rate Cut Bets – Thursday, 28 May

    Where we are: GBP/USD trades at 1.3422, down a touch (-0.04%) after a relatively quiet overnight session with a range of 1.3368-1.3431. Cable remains below yesterday’s NY close despite a weaker DXY. The near-term picture is skewed towards further downside without a hawkish catalyst. The 1.3400 level is key for near-term direction.

    What’s driving it: The dominant driver continues to be the growing expectation of a Bank of England rate cut, as reflected by Dhingra’s dissenting vote at the last meeting. The market increasingly believes the BoE will be forced to ease, regardless of the MPC’s cautious stance, especially if upcoming data confirm the downside trend in inflation and wages. While the UK 2s10s curve remains relatively steep at +58bp, any flattening would signal a greater conviction in earlier BoE easing. The weaker DXY, currently at 99.13, is providing limited support to Cable.

    • Dhingra’s persistent call for cuts, bucking the wider MPC consensus, is fuelling dovish speculation.
    • April’s CPI figures, while still above target, showed a significant drop from previous levels, reinforcing expectations of further disinflationary pressure.
    • Speculative positioning remains heavily short GBP, at the 15th percentile, suggesting a potential squeeze higher on any positive surprise.

    NY session focus: Today’s US data deluge at 08:30 ET, including Core PCE, GDP, and Unemployment Claims, will be crucial for setting the tone. Strong US numbers could further pressure Cable by widening the US-UK 10Y yield spread (-37bp currently). A break below 1.3400 opens the door to a test of the overnight low at 1.3368, while a rally above 1.3431 targets 1.3450/60. The trade at risk is short GBP/USD given deeply negative positioning, while a dovish BoE repricing is the working theme. The pain trade is a surprise hawkish shift from the BoE pushing Cable back above 1.3500.