Category: UK

  • FTSE Faces Gravity as Rate Cut Hopes Fade – Thursday, 28 May

    Where we are: The FTSE 100 is currently trading at 23254, down 139 points or 0.59% on the day. The index is trading near the lower end of its intraday range of 23193-23393, showing some weakness. This decline follows an eight-session winning streak, and it’s underperforming its European peers as well as US futures which are trading in the red but to a lesser extent. A break below 23200 could open the door for a test of the lower end of the range.

    What’s driving it: UK inflation data released last month showed a significant drop in CPI, but the unemployment rate ticked up slightly. While the easing inflation boosted gilt yields, softening them slightly, the unemployment data creates a less clear outlook and keeps the BOE in a holding pattern. This lack of clear direction is weighing on the FTSE, particularly as other global markets remain volatile. The 2s10s curve remains positive at +58bp, signalling markets may not be pricing in rate cuts as aggressively.

    • UK CPI YoY fell -0.50% to 2.8%, a substantial drop, but likely still above the BoE’s comfort level.
    • UK Unemployment ticked up +0.10% to 5%, a possible indicator of a slowing economy that the BoE will be tracking closely.
    • The FTSE is underperforming European peers despite a weaker DXY, suggesting domestic headwinds are at play more than USD strength.

    NY session focus: All eyes will be on the US data prints that are due at 08:30 ET. Given the current risk-off tone, a strong number would likely lead to further selling pressure on the FTSE as US yields climb and the DXY finds its footing. Key levels to watch are 23193 to the downside and 23300 for any short covering rallies. The trade that’s working is shorting miners and utilities, following the weakness seen in the EU session. The trade that’s at risk is chasing the dip in energy names, as crude prices remain elevated. The pain trade here would be a sudden risk-on move driven by dovish Fed commentary, squeezing shorts and pushing the FTSE back above 23400.

  • Guppy Faces Gravity as UK Yields Tumble – Thursday, 28 May

    Snapshot: GBP/JPY trades at 213.85 (-0.28, -0.13%), pressured by falling UK gilt yields after yesterday’s softer CPI print. Focus remains on the BoE’s next meeting, where a more dovish tilt is increasingly priced in. Tokyo Core CPI at 08:30 JST could offer a near-term jolt, although BoJ policy expectations are well-anchored.

    • Watch 213.33 – a break below would confirm downside momentum.
    • Risk: Unexpected hawkish rhetoric from BoJ officials could trigger a sharp Yen squeeze.

    Bias into NY: Short GBP/JPY, targeting 213.00, as continued downside pressure on UK yields, influenced by a dovish repricing of the BoE, overshadows any moderate Yen weakness given the stable DXY at 99.13 and flat US yields.

  • 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.

  • Cable Drifts Sideways as BoE Caution Prevails – Wednesday, 27 May

    Where we are: GBP/USD is trading at 1.3448, effectively unchanged on the day, pinned between intraday lows of 1.3431 and highs of 1.3460. Sterling’s range has been exceptionally tight, echoing the subdued mood in broader FX markets. We’re trading a touch firmer than yesterday’s New York close, but struggling to gain momentum beyond immediate resistance.

    What’s driving it: The Bank of England’s cautious stance continues to dominate sentiment. With the last decision holding rates at 4.50% and a dissenting vote for a cut, the market remains hesitant to fully price in aggressive easing. The MPC’s data-dependent approach, coupled with still-sticky services CPI (near 5%) and resilient wages, keeps the pressure on Sterling. Sarah Breeden’s speech today on modernising money and markets offered little in the way of immediate monetary policy hints, but reinforces the Bank’s focus on financial stability.

    • The UK 2Y yield is down 3bp on the day to 4.255%, reflecting some mild dovish repricing, but the 2s10s curve remains steep at +57bp, suggesting the market still sees longer-term growth potential.
    • Speculative positioning remains crowded short GBP, at the 15th percentile, suggesting a squeeze could materialise on any positive surprises.
    • UK CPI data released last month showed a significant drop, with core CPI falling to 2.5%, yet the labour market is still not showing signs of giving way, further complicating the BoE’s task.

    NY session focus: With no major UK data releases scheduled for today, the focus will remain on broader risk sentiment and dollar dynamics. We will be monitoring US yields closely; the US 10Y is currently at 4.468%. The 08:30 ET US data releases will be closely scrutinised, and a soft print could provide some modest support to Cable, albeit tempered by the BoE’s own caution. Look for a break above 1.3460 to trigger a squeeze of existing shorts. The pain trade for GBP/USD is a sustained move above 1.3500, forcing shorts to cover aggressively.

  • FTSE 100 Outperforms as UK Inflation Cools – Wednesday, 27 May

    Where we are: The FTSE 100 is currently trading at 23507, up 176 points or 0.76% on the day, and testing the upper end of its intraday range of 23321 to 23544. The index is outperforming its European peers this morning, a notable change of pace. This morning’s rally sees it pushing against recent resistance around 23550.

    What’s driving it: The primary driver is this morning’s significantly cooler-than-expected UK CPI print, with headline CPI dropping to 2.8% YoY. This has eased concerns about persistent inflation and bolstered hopes for earlier Bank of England rate cuts. Lower yields, with the UK 2Y down 3bp to 4.255% and the 10Y down 4bp to 4.827%, are providing a tailwind for risk assets. While global sentiment is cautious given overnight weakness in Asia and a mixed picture in Europe, the domestic narrative is clearly taking precedence this morning.

    • UK CPI YoY dropped -0.50% to 2.8%, significantly below the previous reading of 3.3%.
    • The UK 10Y Gilt yield is down 4bp to 4.827%, reflecting reduced inflationary pressures.
    • The FTSE 100’s relative outperformance versus the DAX, which is slightly negative, suggests a UK-specific boost.

    NY session focus: Focus now shifts to the US session, which is expected to open cautiously given overnight losses in Asia. Watch for follow-through in US yields, as continued declines could fuel further upside for the FTSE 100. Key levels to watch are the intraday high of 23544, and then 23600. The trade that’s working is long FTSE 100, short DAX. The risk is a sharp reversal in gilt yields should US data surprise on the upside later this week. A hawkish surprise from any Fed speakers could also present a headwind. The pain trade is FTSE underperformance as energy stocks rebound with crude oil prices.

  • Guppy Stability Continues as Ueda Comments Awaited – Wednesday, 27 May

    Snapshot: GBP/JPY trades at 214.32, up 0.06% on the session, as traders await further signals from BoJ Governor Ueda. UK data remains a mixed bag, with recent CPI prints softening but unemployment ticking up slightly, giving the BoE reason to stay cautious.

    • Watch for reaction around 214.50; a break above could signal renewed upside momentum.
    • BoJ Governor Ueda’s speech at 09:00 JST could introduce volatility if he hints at a shift in policy.

    Bias into NY: Sideways, with a slight upward bias if risk sentiment holds. Unless we hear something hawkish from Ueda, Sterling strength due to slightly firmer Gilts could see GBP/JPY test higher, potentially towards 214.75.

  • NY Session Tactical Brief – Tuesday, 26 May

    Regime: Risk-off as higher real yields trigger broad USD strength, with VIX hovering at 16.76 and US 10Y at 4.486%.

    Today’s market themes:

    • Real-rate repricing: Rising US real yields exert downward pressure on risk assets and commodity prices, favoring USD strength.
    • AUD CPI impact: Australian inflation data sets the tone for RBA policy expectations, with potential for a squeeze on crowded AUD longs.
    • RBNZ decision: RBNZ decision and monetary policy statement in focus.

    The setup: US real yields continue their ascent, tightening financial conditions and prompting a broad risk-off move. The crowded AUD long is vulnerable to downside surprise from CPI, and traders will be watching the RBNZ closely. Look for opportunities to fade rallies in risk assets. Support for S&P futures at 7525.

    Watch list (native time per event):

    • 10:00 ET USD: CB Consumer Confidence (forecast 91.9, prior 92.8)
    • 11:30 AEST AUD: CPI y/y (forecast 4.4%, prior 4.6%)
    • 14:00 NZT NZD: RBNZ Official Cash Rate (forecast 2.25%, prior 2.25%)

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Fed hawkish tone / resilient US data / rising US yields
      • Cross: Global risk aversion / EUR weakness / safe-haven demand
      • Levels: Resistance 99.11, support 98.95
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): ECB dovishness / weak HICP / widening sovereign spreads
      • Cross: Strong DXY / widening US-DE 10Y spread / risk-off flows
      • Levels: Resistance 1.1645, support 1.1624
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE caution / soft services CPI / underperforming Gilts
      • Cross: Strong DXY / widening US-UK 10Y spread / risk aversion
      • Levels: Resistance 1.3505, support 1.3465
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ ultra-dovish / no wage growth / intervention rhetoric
      • Cross: Rising US 10Y / DXY strength / risk-on supports carry
      • Levels: Resistance 159.24, support 158.90
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC cautious / sluggish CPI / softer WTI correlation
      • Cross: Strong DXY / widening US-CA 10Y spread
      • Levels: Resistance 1.3821, support 1.3799
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): CPI miss / weaker Iron-Ore, Copper
      • Cross: Strong DXY / US-AU 10Y widening / China slowdown fears
      • Levels: Resistance 0.7176, support 0.7156
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ dovishness / weak dairy prices
      • Cross: Strong DXY / risk-off / US-NZ 10Y divergence
      • Levels: Resistance 0.5872, support 0.5840
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB active easing / low CPI / Swiss yields repressed
      • Cross: DXY strength / unwinding safe-haven positions
      • Levels: Resistance 0.7855, support 0.7827
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bullish, EUR/JPY Bullish, GBP/JPY Bearish
      • Domestic: Relative central bank stance / relative yields
      • Cross: DXY influence / risk appetite dynamics
      • Levels: Use individual daily ranges to guide
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields / declining breakevens / soft CB demand
      • Cross: Strong DXY / risk-off dampening safe-haven bid
      • Levels: Resistance 4615.2, support 4534.4
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Weaker industrial demand / rising Gold-Silver ratio
      • Cross: Strong DXY / Risk-off flows
      • Levels: Resistance 7870.300, support 7576.000
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Geopolitical tensions / OPEC policy / tight supply
      • Cross: DXY pullback/ risk-on flows
      • Levels: Brent resistance 97.07, WTI support 90.37
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns / rising LME stocks
      • Cross: DXY strength / risk-off sentiment
      • Levels: Resistance 646.9700, support 636.3200
    • SPX:
      • Direction: Bearish.
      • Domestic (US): High valuations / Fed hawkish / rising US yields
      • Cross: Elevated VIX / global growth concerns
      • Levels: S&P 500 futures resistance 7565, cash support 7463
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Mega-cap earnings risk / elevated real yields / AI hype fade
      • Cross: Higher rates sensitivity / VIX volatility
      • Levels: Resistance 29972.25, support 29745.50
    • US30 (Dow):
      • Direction: Bearish.
      • Domestic (US): Cyclical slowdown / rising rates hurting industrials
      • Cross: Bond yield upside
      • Levels: Resistance 51132, support 50865
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response
      • Cross: Global risk sentiment
      • Levels: Resistance 23419, support 23169
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): EU political uncertainty
      • Cross: US tech weakness / strong DXY / rising rates
      • Levels: Resistance 25360, support 25181
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response
      • Cross: US tech volatility / risk-off sentiment
      • Levels: Resistance 65309, support 64616
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates too high / ETF selling / on-chain
      • Cross: DXY strength / risk-off / Nasdaq correlation
      • Levels: Resistance 77521, support 76415

    Positioning watch: CFTC data reveals crowded longs in AUD and Copper (>96th percentile) making them vulnerable to negative data surprises. There’s crowded short exposure in GBP, JPY, and Nasdaq.

    The pain trade: A dovish RBNZ or a surprise CPI beat from Australia igniting a short squeeze in AUD, JPY, and GBP while simultaneously reversing the USD rally.

  • Pound Slips as BoE Rate Cut Bets Remain in Play – Tuesday, 26 May

    Where we are: GBP/USD currently trades at 1.3468, down 0.26% on the day. Cable has traded in a tight range of 1.3465-1.3505 so far, retreating after a brief push higher in early European trade. This level is below yesterday’s New York close, indicating some mild selling pressure building as we head into the US session.

    What’s driving it: Sterling is softer following recent UK macro prints, with downside surprises to inflation alongside a modest rise in the unemployment rate. Specifically, April’s CPI and Core CPI releases showed significant deceleration (2.8% and 2.5% YoY respectively), further fueling expectations that the Bank of England might be closer to considering rate cuts, despite the MPC voting 8-1 to hold rates at their last meeting with Dhingra dissenting for a cut. The dollar is broadly firmer, with DXY at 99.05, further weighing on GBP/USD, but the core dynamic remains the recalibration of BoE expectations in light of the cooling domestic data. Gilt yields are little changed, with the UK 2Y at 4.283% and the 10Y at 4.850%.

    • The 0.7 percentage point drop in Core CPI suggests disinflationary pressures are building faster than the BoE’s forecasts.
    • CFTC data shows net non-commercial GBP positioning at -64,307 contracts, near the 15th percentile, which increases the risk of a short squeeze on any positive Sterling catalyst.
    • The US-UK 10-year yield spread is at -36bp, providing a modest headwind to Cable, though it is the domestic narrative around the BoE that truly sets the tone.

    NY session focus: All eyes will be on the 10:00 ET release of US CB Consumer Confidence, but the impact on Cable will be secondary to the overarching risk tone and its influence on the DXY. Watch for a break below 1.3465 to open up a test of 1.3430 support. On the upside, a push above 1.3505 could trigger a short squeeze towards 1.3535. The trade that’s working is short GBP/USD on dips, fading any rallies into the 1.35 handle. The pain trade for Cable is a surprise hawkish shift in BoE rhetoric that catches the crowded short positioning off guard.

  • FTSE 100 Outperforms as Gilt Yields Hold Steady – Tuesday, 26 May

    Where we are: The FTSE 100 is currently trading at 23418, up 249 points or 1.07% on the day, holding near the intraday high of 23419. The index has rallied steadily through the European session, outperforming its continental peers, trading above Friday’s close after yesterday’s Bank Holiday. The FTSE 100 has thus far traded in a range of 23169 to 23419.

    What’s driving it: UK equities are catching a bid as Gilt yields remain relatively stable despite slightly lower inflation prints last month. CPI came in lower than expected, fueling speculation that the Bank of England might adopt a more dovish stance sooner than anticipated, but without provoking a sell-off in Gilts. The FTSE’s outperformance is further supported by strong gains in specific sectors like banking and mining, benefiting from a catch-up move after the bank holiday closure. The dip in US yields adds another layer of support, as the US 10Y is currently at 4.486%

    • UK CPI YoY fell to 2.8%, a significant drop from the previous 3.3%, hinting at easing inflationary pressures.
    • Kingfisher (B&Q) jumped as much as 8.3% following a positive trading update, lifting the broader retail sector.
    • BP shares are down over 4% following news that its chair was removed due to governance concerns, presenting a stock-specific drag on the index.

    NY session focus: Look for the FTSE 100 to track broader risk sentiment during the US session, specifically watching the direction of the S&P 500 futures, currently down 0.24%. Key levels to watch are 23450 as initial resistance and 23300 as initial support. The trade that’s working is long UK banks and miners, while short BP is at risk of a short squeeze if the stock stabilizes. The pain trade would be a sharp reversal in Gilt yields coupled with a broad risk-off move in US equities.

  • Sterling/Yen Range-Bound as BoE Rate Cut Bets Stabilize – Tuesday, 26 May

    Snapshot: GBP/JPY currently trades at 214.42 (-0.06%), consolidating within a tight intraday range. Focus remains on the BoE’s cautious stance, with resilient services CPI and wages keeping rate cut expectations at bay for now. Today’s key event is BOJ Governor Ueda speaking at 09:00 JST.

    • Key level to watch is the intraday high of 214.68; a break above this level could signal renewed bullish momentum.
    • Risk: Unexpected hawkish comments from BOJ Governor Ueda could trigger JPY strength, weighing on GBP/JPY.

    Bias into NY: Neutral to slightly bullish, contingent on risk sentiment and UK yields remaining stable. A sustained break above 214.70 would open the way to 215.00, but a move below 214.20 would negate this view.

  • NY Session Tactical Brief – Monday, 25 May

    Regime: Risk-on, supported by falling VIX (16.76) and slightly rising 10Y breakevens (2.4%) despite higher real yields (2.18%).

    Today’s market themes:

    • Oil supply disruption continues as India seeks alternative sources amidst Hormuz Strait tensions.
    • USD strength muted despite higher US real yields, signaling risk appetite.
    • Crowded positioning presents squeeze potential in GBP, JPY, Copper, and Nasdaq.

    The setup: Oil-sensitive assets are reacting to headlines regarding supply disruptions, while broader market risk sentiment remains positive, weighing on the USD. Crowded shorts in JPY and GBP against a backdrop of muted dollar strength create a setup for potential squeeze. Watch US 10Y yield reaction for risk confirmation.

    Watch list (native time per event):

    • 08:30 ET US Durable Goods Orders (forecast vs prior)
    • 10:00 ET US New Home Sales (forecast vs prior)
    • 11:00 ET US Dallas Fed Manufacturing Index (forecast vs prior)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed rhetoric on inflation / US data resilience / rising real yields
      • Cross: Global risk appetite / JPY and GBP strength potential
      • Levels: Support 118.80, Resistance 119.50
    • EUR/USD:
      • Direction: Neutral
      • Domestic (EU): ECB caution / Eurozone inflation watch / German yields
      • Cross: DXY weakness / US-DE 10Y narrowing / risk-on flow
      • Levels: Support 1.1620, Resistance 1.1670
    • GBP/USD (Cable):
      • Direction: Bullish
      • Domestic (UK): BoE on hold / softer inflation / Gilt yield stability
      • Cross: DXY weakness / US-UK 10Y narrowing / risk appetite
      • Levels: Support 1.2680, Resistance 1.2750
    • USD/JPY:
      • Direction: Bearish
      • Domestic (JP): BoJ inaction / wage pressure / intervention threat
      • Cross: US 10Y flattening / DXY weakness / risk-on stability
      • Levels: Support 156.50, Resistance 157.50
    • USD/CAD (Loonie):
      • Direction: Neutral
      • Domestic (CA): BoC on hold / CPI watch / WTI correlation
      • Cross: DXY strength / US-CA 10Y widening
      • Levels: Support 1.3780, Resistance 1.3850
    • AUD/USD (Aussie):
      • Direction: Neutral
      • Domestic (AU): RBA on hold / commodity prices / cautious tone
      • Cross: DXY weakness / US-AU 10Y narrowing / China watch
      • Levels: Support 0.7070, Resistance 0.7130
    • NZD/USD (Kiwi):
      • Direction: Neutral
      • Domestic (NZ): RBNZ easing priced in / Dairy prices / subdued tone
      • Cross: DXY weakness / US-NZ 10Y narrowing / risk appetite
      • Levels: Support 0.6400, Resistance 0.6450
    • USD/CHF (Swissy):
      • Direction: Neutral
      • Domestic (CH): SNB watching / CPI stable / neutral stance
      • Cross: DXY strength / safe-haven flows / risk sentiment
      • Levels: Support 0.7770, Resistance 0.7830
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bullish
      • Domestic: Relative ECB-BoE, ECB-BoJ, BoE-BoJ policy and yields drive crosses.
      • Cross: DXY influence / overall risk sentiment / correlation dynamics
      • Levels: Monitor respective supports/resistances closely on cross charts
    • XAU (Gold):
      • Direction: Bullish
      • Domestic (asset-specific): Real yields stabilizing / Breakevens rising / Safe haven demand
      • Cross: DXY weakness / risk appetite
      • Levels: Support $4540, Resistance $4570
    • XAG (Silver):
      • Direction: Neutral
      • Domestic (asset-specific): Industrial demand / Gold-Silver ratio watch
      • Cross: DXY weakness / risk appetite
      • Levels: Support $TBD, Resistance $TBD
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): EIA Inventory impact / OPEC / geopolitical premium
      • Cross: DXY strength / risk aversion from supply shock
      • Levels: Support WTI $110.50, Resistance WTI $113.50
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China stimulus / inventories low / supply concerns
      • Cross: Global growth proxy / DXY strength
      • Levels: Support TBD, Resistance TBD
    • SPX:
      • Direction: Neutral
      • Domestic (US): Earnings season / Fed watching / US yields stable
      • Cross: VIX regime / global backdrop
      • Levels: Futures support 5290, resistance 5320
    • NDX:
      • Direction: Neutral
      • Domestic (US): Mega-cap performance / real yields / AI momentum
      • Cross: Rates sensitivity / VIX stability
      • Levels: Support TBD, Resistance TBD
    • US30 (Dow):
      • Direction: Neutral
      • Domestic (US): Industrial earnings / cyclical sentiment
      • Cross: Bond yield reaction
      • Levels: Support TBD, Resistance TBD
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling influence / Gilt yields / commodity mix
      • Cross: Global risk / US tone
      • Levels: Support TBD, Resistance TBD
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields / IFO watch / EU sentiment
      • Cross: US tech influence / DXY direction / risk tone
      • Levels: Support TBD, Resistance TBD
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY level / JGB yields / BoJ anticipation
      • Cross: US tech / risk regime
      • Levels: Support TBD, Resistance TBD
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): Funding rate / ETF flow / on-chain signals
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support TBD, Resistance TBD

    Positioning watch: Crowded shorts exist in JPY (4th percentile) and GBP (15th percentile), while crowded longs are in AUD (98th percentile), Copper (96th percentile), and Bitcoin (90th percentile). A positive surprise in UK or Japanese data could trigger a short squeeze in their respective currencies, while disappointment in China data could hurt AUD and Copper.

    The pain trade: A sustained break above 157.50 in USD/JPY, fueled by hawkish Fed commentary, would squeeze crowded JPY shorts and trigger broader risk-off flows.

  • Cable Rides Gilt Curve Steepening – Monday, 25 May

    Where we are: GBP/USD is trading around 1.2715, testing the upper end of its recent range. Overnight, Cable held a tight 1.2680-1.2720 range, and currently sits about 20 pips above Friday’s New York close. The 1.2750 level remains a key technical hurdle, with strong resistance expected there.

    What’s driving it: Sterling is finding support from a steepening gilt curve as markets continue to digest the latest UK inflation data. While the headline CPI figures showed welcome moderation, the persistence of services inflation and resilient wage growth are keeping the Bank of England in a hawkish holding pattern for now. This is manifesting as increased steepening in the gilt curve. Any further hawkish re-pricing in Gilts would push Cable higher; conversely, a dovish tilt would present downside risk. The rise in US 10Y Real Yields to 2.18% offers limited headwind to the Pound given the relatively higher yields available in the UK and the ongoing hawkish stance of the BOE.

    • BoE vote split 8-1 underscores the MPC’s reluctance to cut rates prematurely, a signal markets may be underpricing
    • The 2s10s gilt spread steepened by 6bp on Friday, reflecting expectations for delayed BoE easing.
    • Crowded GBP shorts (15th %ile) leave Cable vulnerable to a squeeze on any positive surprises.

    NY session focus: There are no major UK data releases scheduled today, so Cable will likely trade with a US-centric bias, particularly around risk sentiment and dollar flows. Watch for movement in US Treasury yields and the DXY for cues. Key levels to watch are 1.2680 as initial support and 1.2750 as resistance. The squeeze on GBP shorts remains a compelling trade, but a break below 1.2650 would invalidate the near term bullish thesis. The pain trade is a decisive break above 1.2750, triggering a wave of short covering.

  • Footsie Sags on Soft Inflation, Rising Real Yields – Monday, 25 May

    Where we are: The FTSE 100 is trading around 10,430, down roughly 35 points from Friday’s close. Overnight range has been relatively contained, oscillating between 10,420 and 10,470. Friday’s close marked the highest level since April 22nd, but momentum appears to be fading this morning.

    What’s driving it: UK inflation data, released last week, continues to weigh on sentiment. While the FTSE enjoyed a strong week overall, driven partly by easing rate hike expectations from the Bank of England, the weaker-than-expected CPI print (2.8% YoY) combined with a tick up in the unemployment rate to 5% is giving investors pause. The rise in US real yields, currently at 2.18%, further contributes to the headwind by drawing capital away from risk assets like the FTSE. Despite stabilisation in global markets, investors are cautious about the likelihood of a US-Iran agreement and its potential impact on oil prices.

    • UK CPI at 2.8% YoY in April, down from 3.3% prior, suggesting easing inflationary pressures.
    • US 10Y Real Yields climbed to 2.18%, increasing the appeal of US assets.
    • The 2s10s spread has compressed to 0.43%, signalling further risk-off sentiment.

    NY session focus: With no major UK data releases scheduled today, the FTSE will likely be driven by external factors. Watch for US Durable Goods Orders at 08:30 ET. Key levels to watch on the downside are 10,400, followed by 10,350. A break below 10,350 could trigger a deeper correction. The trade that’s working is shorting FTSE rallies into resistance. The trade at risk is holding onto long positions initiated earlier in the month. The pain trade for the FTSE would be a surprise hawkish turn from the Bank of England or a sharp spike in oil prices despite global growth concerns.

  • Guppy Faces Renewed Downside Pressure on BoE Caution – Monday, 25 May

    Snapshot: GBP/JPY trades near 193.40, pressured by a cautious Bank of England stance despite recent softer inflation prints. The central bank’s reluctance to pivot to rate cuts amid sticky services CPI is weighing on Sterling against the Yen’s slow-normalization bias. Keep an eye on broader risk sentiment as well, with VIX down.

    • Watch 193.00; a break below opens the way to 192.50.
    • Rising US real yields pose a headwind to risk assets, a GBP/JPY negative.

    Bias into NY: Short GBP/JPY. BoE caution relative to BoJ normalization and rising US real yields favour Yen strength. Look for moves toward 193.00.

  • NY Session Tactical Brief – Friday, 22 May

    Regime: Mixed — VIX steady at 17.44 despite higher oil and Dow futures, indicating risk appetite remains selective and rate-sensitive.

    Today’s market themes:

    • USD Strength: DXY supported by relatively hawkish Fed pricing.
    • Oil Volatility: Geopolitical tensions and inventory concerns drive swings.
    • Data Dependence: Retail sales releases in GBP and CAD in focus.

    The setup: USD strength continues, fueled by hawkish Fed bets as US yields remain elevated. Traders eye the 1.1600 level on EUR/USD; a break could trigger further downside. Focus remains on incoming data and any further escalation of geopolitical tensions in the Middle East.

    Watch list (native time per event):

    • 07:00 BST GBP: Retail Sales m/m (forecast -0.6%, prior 0.7%)
    • 08:30 ET CAD: Retail Sales m/m (forecast 0.6%, prior 0.7%)
    • 10:00 ET USD: Revised UoM Consumer Sentiment (forecast 48.2, prior 48.2)

    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
      • Domestic (US): Fed pricing stable / economic resilience
      • Cross: Global growth worries / safe-haven bids on tension
      • Levels: Support 99.00 / Resistance 99.50
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / rate divergence / risk-off flows
      • Levels: Support 1.1600 / Resistance 1.1650
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): Disappointing retail sales weigh on GBP
      • Cross: DXY strength / US-UK yield spreads / risk sentiment
      • Levels: Support 1.3380 / Resistance 1.3450
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): Intervention risk high / BoJ dovish
      • Cross: US yields / risk-on / DXY strength
      • Levels: Support 158.50 / Resistance 159.50
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / WTI volatility / US-CA spread
      • Levels: Support 1.3600 / Resistance 1.3700
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): Surprise unemployment rise weighs on Aussie
      • Cross: DXY strength / China growth / commodity prices
      • Levels: Support 0.6600 / Resistance 0.6650
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / risk aversion / US-NZ yield spreads
      • Levels: Support 0.5850 / Resistance 0.5900
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / safe-haven demand eases
      • Levels: Support 0.7800 / Resistance 0.7900
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY bullish, GBP/JPY bearish
      • Domestic: BoE vs ECB / BoJ, relative yield spreads / economic data
      • Cross: DXY / risk aversion / cross-of-crosses dynamic
      • Levels: Monitor for breakout patterns
    • XAU (Gold):
      • Direction: Bullish
      • Domestic (asset-specific): Real yields down / safe-haven bids
      • Cross: DXY weaker / risk aversion
      • Levels: Support $4500 / Resistance $4550
    • XAG (Silver):
      • Direction: Neutral
      • Domestic (asset-specific): Industrial demand / Gold-Silver ratio
      • Cross: DXY / risk appetite
      • Levels: Support $29.50 / Resistance $30.00
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Refinery attack / supply concerns
      • Cross: DXY / risk appetite
      • Levels: Support $108 / Resistance $115
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China stimulus hope/ LME stocks
      • Cross: DXY / global growth
      • Levels: Support $5.00 / Resistance $5.10
    • SPX:
      • Direction: Bullish
      • Domestic (US): Better earnings / Rate cut expectations
      • Cross: Steady VIX / Global sentiment
      • Levels: Futures support 5280 / Resistance 5320
    • NDX:
      • Direction: Bullish
      • Domestic (US): Mega-cap tech / Yield sensitivities
      • Cross: rates sensitivity / VIX
      • Levels: Support 19700 / Resistance 19900
    • US30 (Dow):
      • Direction: Bullish
      • Domestic (US): Industrial activity / Positive earnings
      • Cross: Bond yield reaction
      • Levels: Support 39500 / Resistance 40000
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Weak pound / commodity-heavy mix
      • Cross: global risk / US tone
      • Levels: Support 10400 / Resistance 10500
    • DAX:
      • Direction: Bullish
      • Domestic (DE): Bund yields stable / EU confidence
      • Cross: US tech/ DXY / risk-on
      • Levels: Support 24700 / Resistance 24900
    • Nikkei:
      • Direction: Bullish
      • Domestic (JP): JPY weakness / BoJ policy
      • Cross: US Tech / risk sentiment
      • Levels: Support 63000 / Resistance 63500
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF inflows / funding rates
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support $67500 / Resistance $68500

    Positioning watch: AUD and Copper are crowded long (>98th percentile), leaving them vulnerable to a squeeze lower on weaker China data or disappointing earnings. Nasdaq is crowded short (<0th percentile) and ripe for a rally if yields soften further.

    The pain trade: A sharp rally in the Nasdaq fueled by falling real yields would squeeze crowded shorts and force further buying, pushing indices higher.