Category: UK

  • Cable Pressured by Soft Retail Sales – Friday, 22 May

    Where we are: GBP/USD is currently trading around 1.3405, pressured after disappointing domestic data. The pair traded in a tight overnight range of 1.3400-1.3430. This is below yesterday’s New York close around 1.3420, suggesting the intraday bias is bearish. Key support lies at 1.3370, with resistance around 1.3450.

    What’s driving it: Sterling is on the back foot this morning following a significantly weaker-than-expected UK Retail Sales print, which came in at -0.6% m/m versus a forecast of -0.6%. This reinforces concerns of slowing UK economic activity, adding to earlier data suggesting a cooling labor market and contraction in private sector activity. These concerns, coupled with the Bank of England’s cautious and data-dependent stance, are weighing on rate hike expectations. US yields are retreating from recent highs, but the dominant intraday driver remains domestic.

    • UK Retail Sales printed -0.6% m/m, missing expectations and highlighting consumer weakness.
    • FT Markets reports gilt relief rally sending yields to biggest weekly drop since 2024 as Burnham pledge to stick to fiscal rules and pullback from bets on higher BoE interest rates drive rebound.
    • CFTC data shows moderate short positioning in GBP, leaving some room for further downside.

    NY session focus: The main event for the NY session will be the Revised UoM Consumer Sentiment release at 10:00 ET. While technically a USD driver, given the soft UK retail sales, any downside surprise could amplify Sterling weakness. Key levels to watch are 1.3370 on the downside and 1.3450 on the upside. The trade that’s working is fading Cable rallies. The trade at risk is a short squeeze if US data significantly disappoints and risk sentiment improves sharply, though BoE caution is a headwind. The pain trade is a sustained break above 1.3450, fueled by a dovish repricing of the BoE.

  • FTSE 100 Momentum Flags as Domestic Data Disappoints – Friday, 22 May

    Where we are: The FTSE 100 is currently trading around 10,475, down from its overnight high of 10,490. It’s holding above its intraday low near 10,460, but the index is under pressure as it struggles to maintain the gains seen earlier in the week. The current level is below yesterday’s New York close, suggesting a weaker tone heading into the US session.

    What’s driving it: This morning’s weaker-than-expected UK Retail Sales print is weighing on the FTSE. The -1.3% m/m figure, significantly below the -0.6% forecast, has triggered a reassessment of the UK’s economic outlook and tempered expectations for further Bank of England rate hikes. This disappointment overshadowed earlier data showing softer inflation and a slight improvement in consumer confidence, as traders scale back bets on BoE tightening amid signs of a slowing economy. While US Treasury yields have fallen, offering some support, the focus remains firmly on the domestic picture.

    • UK Retail Sales m/m printed -1.3%, nearly double the forecasted -0.6% decline.
    • The UK’s unemployment rate edged up to 5% in February, signaling a softening jobs market.
    • Despite the recent pullback, the FTSE 100 remains at relatively high levels, suggesting some resilience, though it now looks vulnerable to further downside.

    NY session focus: The US session will likely amplify or counter the current negative sentiment. Key levels to watch on the downside are 10,450 and then 10,400, while resistance sits at 10,500. Any further downside surprises from US data or hawkish commentary from Fed officials could intensify the pressure. The trade that’s working is shorting FTSE on bounces, while the trade at risk is chasing the recent rally. The pain trade for the FTSE 100 would be a strong rebound in US sentiment coupled with a surprise improvement in UK economic data, forcing shorts to cover.

  • Guppy Momentum Stalls Amid BoE Rate Cut Bets – Friday, 22 May

    Snapshot: GBP/JPY is trading around 192.35, marginally lower on the session, as dovish repricing of the BoE’s rate path continues to weigh on Sterling. Today’s UK retail sales print at 07:00 London will be key to gauging consumer resilience.

    • Support lies near 191.80, the overnight low, a break of which could accelerate losses.
    • Watch for further BoJ commentary echoing Koeda’s recent speech, which may hint at future policy adjustments.

    Bias into NY: Cautious on GBP/JPY, favouring a test of 192.00 as weaker UK data fuels BoE easing expectations; further downside could be amplified if US yields continue to drift lower, dampening Yen appeal.

  • NY Session Tactical Brief – Thursday, 21 May

    Regime: Risk-off, fueled by rising real yields and renewed Iran tensions, with VIX at 18.06 and DXY bid.

    Today’s market themes:

    • Oil shock revival: Geopolitical tensions around Iran exacerbate supply concerns, driving crude higher.
    • Rates repricing: Dimon’s hawkish comments reinforce the potential for higher-for-longer, lifting Treasury yields.
    • Mixed PMI signals: Eurozone and UK PMIs offer a mixed bag, with services sector weakness raising growth concerns.

    The setup: Renewed geopolitical risks are stoking inflation fears and pushing real yields higher, putting pressure on risk assets. Look for opportunities to fade rallies in equities, especially tech. Watch the 10Y real yield at 2.18% as a key level. Initial weakness in Dow futures around 39,850 offers a possible short entry.

    Watch list (native time per event):

    • 11:30 AEST AUD: Employment Change (forecast 16.7K, prior 17.9K)
    • 09:15 CET EUR: French Flash Manufacturing PMI (forecast 52.1, prior 52.8)
    • 09:30 London GBP: Flash Services PMI (forecast 51.7, prior 52.0)

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Fed policy uncertainty, strong US yields
      • Cross: Risk-off sentiment, safe-haven demand
      • Levels: Resistance 119.50, support 119.00
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Weak Eurozone PMIs, ECB dovishness
      • Cross: Strong DXY, widening US-DE 10Y spread, risk-off flows
      • Levels: Resistance 1.1620, support 1.1580
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): Mixed UK PMIs, uncertainty around BoE path
      • Cross: Strong DXY, US-UK 10Y spread, risk aversion
      • Levels: Resistance 1.2660, support 1.2600
    • USD/JPY:
      • Direction: Neutral
      • Domestic (JP): BoJ caution, intervention risk remains high
      • Cross: Rising US 10Y yields, DXY strength, risk sentiment
      • Levels: Resistance 159.50, support 159.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC cautious tone, WTI volatility
      • Cross: Strong DXY, US-CA 10Y spread
      • Levels: Resistance 1.3820, support 1.3750
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): Mixed labour data, RBA tightening path uncertain
      • Cross: Strong DXY, US-AU 10Y spread, China growth concerns
      • Levels: Resistance 0.6680, support 0.6620
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ easing bias
      • Cross: Strong DXY, US-NZ 10Y spread, risk-off sentiment
      • Levels: Resistance 0.5900, support 0.5850
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB dovishness, Swiss yields lagging
      • Cross: Strong DXY, safe-haven demand
      • Levels: Resistance 0.7900, support 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bearish
      • Domestic: Relative ECB/BoE/BoJ stance, relative yields
      • Cross: DXY, risk regime, cross-of-crosses dynamics
      • Levels: Monitor key supports/resistances on charts
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields, CB demand waning
      • Cross: Strong DXY, risk aversion not fully supportive
      • Levels: Resistance $4,510, support $4,480
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Slower industrial demand growth
      • Cross: Strong DXY, risk-off sentiment
      • Levels: Follow Gold
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Iran tensions / potential supply disruption
      • Cross: DXY offsetting factor, risk-off a moderate headwind
      • Levels: WTI Resistance $102, Support $98
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns, LME inventories stable
      • Cross: Strong DXY, global growth proxy
      • Levels: Follow market trend, trade in accordance with real yields.
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising yields, earnings headwinds
      • Cross: Elevated VIX, global risk-off
      • Levels: Futures resistance 5300, cash support 5250
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yield sensitivity, mixed earnings
      • Cross: Rates sensitivity, elevated VIX
      • Levels: Follow SPX general resistance and support level
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical headwinds, rising yields
      • Cross: Bond-yield reaction
      • Levels: Follow SPX general resistance and support level
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling strength, mixed PMI data, commodity exposure
      • Cross: Global risk, US tone
      • Levels: Resistance 10,400, support 10,350
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Weak German PMIs, Bund yield increase
      • Cross: US tech, DXY, risk-off
      • Levels: Resistance is high, monitor yield trend
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): Cautious BOJ commentary, JGB yield focus
      • Cross: US tech reaction, global risk
      • Levels: Follow global risk sentiment
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flows slowing, funding rates stable
      • Cross: DXY strength, risk-off, Nasdaq correlation
      • Levels: Resistance $68,000, support $67,500

    Positioning watch: AUD, Copper, and US Dollar are crowded longs (>80th percentile), creating squeeze risk on any positive surprises or a shift in sentiment. Nasdaq 100 and Japanese Yen are crowded shorts (<20th percentile), risking a sharp rally on positive catalysts.

    The pain trade: A dovish pivot from a Fed speaker today would trigger a violent short squeeze in Nasdaq and Yen, simultaneously undermining the DXY.

  • Pound Weakness to Persist on Growth Concerns – Thursday, 21 May

    Where we are: Cable currently trades at 1.2635, consolidating near the bottom of its recent range. Overnight, GBP/USD oscillated between 1.2620 and 1.2670. This level is significantly below yesterday’s NY close of 1.2680 and the pair remains under pressure, struggling to gain traction above the 1.2650 mark. Technicals suggest further downside risk, with limited support until 1.2580.

    What’s driving it: Sterling is under pressure this morning following a concerning slowdown in UK economic activity. Today’s Flash PMI data at 09:30 BST are expected to confirm this cooling, with both manufacturing and services sectors projected to show a slowdown; manufacturing is expected to print 52.9 (prior 53.6) while services are expected to drop to 51.7 (prior 52.0). This comes on the heels of recent data showing April inflation undershooting expectations and the labour market unexpectedly softening, reinforcing the view that the BoE may be hesitant to tighten policy aggressively. This contrasts with a still-hawkish priced US curve, sending real-rate differentials in favour of the Dollar.

    • The MPC’s current cautious, data-dependent bias, underscored by the 8-1 vote split at the last meeting, leaves Sterling vulnerable to downside surprises.
    • Speculative positioning in GBP remains moderately short, but has increased in net length in the latest week, leaving room for further short build if the incoming data continues to disappoint.
    • Rob Wood at Pantheon Macroeconomics notes that a sharp downturn in output means the Bank of England is more likely to hold interest rates in July, as mentioned in a Guardian Business article.

    NY session focus: Traders will be closely watching the 08:30 ET release of the Philly Fed Manufacturing Index and Unemployment Claims for further clues on the US economic outlook, which will likely impact DXY and indirectly affect Cable. BoE Gov Bailey’s speech at 16:00 BST will also be closely scrutinised for any shift in tone or forward guidance. Key levels to watch are 1.2600 for a potential break lower and 1.2680 as immediate resistance. The short GBP/USD trade remains favoured, while long positions are at risk. The pain trade would be a surprisingly hawkish tone from Bailey after a beat on the US data, triggering a rapid short squeeze.

  • Footsie Pressured by Weak Data, Eyes Bailey – Thursday, 21 May

    Where we are: The FTSE 100 is trading around 10,375, slightly below yesterday’s NY close, after a choppy overnight session. Resistance sits at 10,450, the previous intraday high. Support comes in around 10,320, the overnight low. The index remains under pressure, extending losses from yesterday afternoon.

    What’s driving it: The UK economic picture is deteriorating, weighing heavily on the Footsie. This morning’s Flash PMI data disappointed, with both Manufacturing (forecast 52.9, actual TBD) and Services (forecast 51.7, actual TBD) expected to fall short of expectations, pointing to a slowdown in business activity. Adding to the gloom, CPI figures released last month showed a sharp drop in inflation, suggesting the BOE may have room to cut rates sooner than anticipated, weakening the case for holding UK equities. Broader geopolitical risks surrounding the conflict in the Middle East are further dampening sentiment, exacerbating the weakness in the UK market.

    • UK CPI YoY dropped 0.5% to 2.8% in April, easing inflation concerns.
    • UK Unemployment Rate ticked up to 5% in February, signaling a softening labor market.
    • Flash PMI surveys due at 09:30 BST will be critical in gauging the current economic pulse.

    NY session focus: All eyes are on BOE Governor Bailey’s speech at 16:00 BST, for any hints about the central bank’s future policy path. Traders will be watching the 10,320 support level; a break below would open the door to further downside toward 10,250. The trade that’s working is shorting rallies towards 10,400. The trade at risk is being long, expecting a swift recovery. A sustained rally in WTI crude could provide some support to energy stocks within the FTSE, but overall sentiment remains fragile. The pain trade is a hawkish surprise from Bailey, igniting a sharp rally back above 10,450.

  • Guppy Faces Resistance as BoJ Risks Loom – Thursday, 21 May

    Snapshot: GBP/JPY is consolidating near recent highs after a mixed bag of UK data; the pair remains sensitive to BoJ communication. The BoJ’s Koeda spoke overnight in Fukuoka, but the comments offered little new information. Later today, all eyes will be on BOE Gov Bailey’s speech at 16:00 London for further clues on the MPC’s thinking.

    • The 193.50-194.00 zone represents formidable resistance given prior intervention zones and potential MoF discomfort with further Yen weakness.
    • Rising US real yields and a firm USD are headwinds for GBP/JPY, but the pair’s sensitivity to Yen-specific drivers outweighs broader USD moves for now.

    Bias into NY: Sideways, with a watchful eye on intervention risk; a clear break above 194.00 would open the door to further upside, while a dovish read on Bailey’s remarks could see GBP/JPY retrace towards 192.50.

  • NY Session Tactical Brief – Wednesday, 20 May

    Regime: Mixed — the VIX at 17.82 suggests a moderately risk-on environment, but rising US 10Y real yields near 2.13% offset the positive sentiment.

    Today’s market themes:

    • FOMC Minutes: focus on the Fed’s inflation outlook and rate-cut timeline.
    • Iran tensions: geopolitical risks weigh on oil and broader sentiment.
    • Nvidia earnings: potential market catalyst, could affirm rally or spur correction.

    The setup: All eyes on the FOMC Minutes at 2 PM ET. The market is pricing in minimal rate cuts this year. Hawkish surprises in the minutes could strengthen the dollar and pressure risk assets. A dovish surprise could weaken the dollar and boost stocks and bonds. Watch the 2Y yield for reaction.

    Watch list (native time per event):

    • 07:00 London [High] GBP: CPI y/y (forecast 3.0%, prior 3.3%)
    • 11:30 AEST [High] AUD: Employment Change (forecast 16.7K, prior 17.9K)
    • 14:00 ET [High] USD: FOMC Meeting Minutes

    Bias by asset:

    • DXY:
      • Direction: Neutral.
      • Domestic (US): FOMC minutes could provide hawkish catalysts.
      • Cross: Risk sentiment shifts amid Nvidia earnings anticipation.
      • Levels: Support at 119.00; resistance at 119.50.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and rising US yields pressure the pair.
      • Levels: Resistance at 1.0830; support at 1.0780.
    • GBP/USD (Cable):
      • Direction: Neutral.
      • Domestic (UK): CPI miss fueled gilt buying – focus on MPC hearings.
      • Cross: DXY strength and risk appetite weigh on cable.
      • Levels: Resistance at 1.2700; support at 1.2650.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ dovish stance and weak wage data.
      • Cross: US 10Y yield strength and DXY provide tailwinds.
      • Levels: Support at 158.50; resistance at 160.00.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC cautious outlook and weak CPI.
      • Cross: DXY strength and weaker oil prices pressure CAD.
      • Levels: Support at 1.3750; resistance at 1.3800.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): RBA cautious stance on inflation. Employment data in focus.
      • Cross: DXY strength and China growth concerns weigh.
      • Levels: Resistance at 0.6700; support at 0.6630.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ dovish stance after recent meetings.
      • Cross: DXY strength and risk-off sentiment impact the Kiwi.
      • Levels: Resistance at 0.5860; support at 0.5800.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias supports USD/CHF upside.
      • Cross: DXY strength and risk-off flows support pair.
      • Levels: Support at 0.7850; resistance at 0.7950.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bearish, EUR/JPY Bullish, GBP/JPY Bullish.
      • Domestic: Relative CB policy (BoE more hawkish than ECB; BoJ more dovish).
      • Cross: DXY strength weighing on EUR/GBP; risk-on supporting JPY crosses.
      • Levels: EUR/GBP: 0.8480/0.8530; EUR/JPY: 170.00/171.00; GBP/JPY: 193.50/194.50.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields increase the opportunity cost.
      • Cross: DXY strength weighs on Gold.
      • Levels: Resistance at $4,480/oz; support at $4,450/oz.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Weaker industrial demand prospects.
      • Cross: DXY strength and risk-off environment are headwinds.
      • Levels: Resistance at $32.00/oz; support at $31.50/oz.
    • WTI / Brent:
      • Direction: Neutral.
      • Domestic (asset-specific): Iran talks and Ukraine refinery attack priced in.
      • Cross: DXY strength and mixed risk sentiment.
      • Levels: WTI: $100/$103; Brent: $108/$111.
    • Copper:
      • Direction: Neutral.
      • Domestic (asset-specific): Wait for new China catalyst to lift LME stocks.
      • Cross: DXY and global growth prospects.
      • Levels: Resistance at $5.15; support at $5.00.
    • SPX:
      • Direction: Neutral.
      • Domestic (US): Earnings season nearing end; Fed policy key.
      • Cross: VIX stable, global sentiment depends on Nvidia.
      • Levels: Futures 5300/5340; cash support 5280/5320.
    • NDX:
      • Direction: Neutral.
      • Domestic (US): Nvidia earnings key; real yield reaction impacts valuation.
      • Cross: Rates sensitivity and VIX.
      • Levels: 19250/19450.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Awaiting for more industrials to show positive earnings.
      • Cross: Bond-yield reaction to FOMC minutes.
      • Levels: 39700/39900.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): Sterling swings impacting export-heavy index.
      • Cross: Global risk and US tone.
      • Levels: 10200/10300.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech and DXY.
      • Levels: 24300/24500.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY weakness continues, JGB yields drive sentiment.
      • Cross: US tech and risk regime.
      • Levels: 59500/60000.
    • BTC:
      • Direction: Neutral.
      • Domestic (asset-specific): ETF flows holding steady, no major funding stress.
      • Cross: DXY and risk sentiment influencing Bitcoin’s price action.
      • Levels: 65000/68000.

    Positioning watch: Crowded longs in AUD and Copper (98th percentile) and crowded shorts in Nasdaq (0th percentile) and JPY (8th percentile) suggest squeeze risks if data improves or Fed turns dovish. Dollar long also extended (85th %ile) exposes downside on risk-on turn.

    The pain trade: A dovish surprise in the FOMC minutes would trigger a short squeeze in Nasdaq, fuel a rally in beaten-down gold, and weaken the dollar, hurting those positioned for higher rates.

  • Pound Recovers as UK Inflation Undershoots Expectations – Wednesday, 20 May

    Where we are: Cable is currently trading around 1.2680, recovering from overnight lows near 1.2650. The pair is oscillating above the 1.2670 level, which marks the 50-day moving average. This is a significant improvement versus Friday’s close, fuelled by today’s domestic CPI print, but remains well below the multi-month highs of 1.2740 seen last week.

    What’s driving it: The primary driver for Sterling today is the cooler-than-expected UK inflation data. April’s CPI came in at 2.8% year-on-year, below both the forecast of 3.0% and the previous reading of 3.3%, triggering a paring back of BOE rate-hike expectations, and prompting a jump in Gilts. The market is now pricing in just two rate hikes by December. However, despite the dovish repricing, the Pound has staged a notable recovery reflecting a sentiment that the UK economy may have sufficient headroom to manage a slightly less restrictive monetary policy.

    • UK CPI undershooting expectations at 2.8% YoY, the lowest since March 2025.
    • Gilt yields sharply down on the back of the inflation print, as traders reassess the Bank of England’s policy path.
    • CFTC data showing a moderately short Sterling position (-43,059 contracts) suggests limited room for further downside, potentially squeezing shorts.

    NY session focus: The main event for the US session will be the release of the FOMC meeting minutes at 14:00 ET. While the minutes are likely to be backward-looking, any hawkish surprises could put downward pressure on Cable. Key levels to watch are resistance around 1.2700 and support at 1.2650. The short Sterling trade is now vulnerable to a squeeze. The pain trade is likely a rally through 1.2700, forcing shorts to cover and potentially testing higher levels towards 1.2750.

  • Footsie Faces Headwinds from Falling Inflation Expectations – Wednesday, 20 May

    Where we are: The FTSE 100 currently trades around 10,260, slightly below yesterday’s close, after a volatile session in Europe. The index is bouncing around a 50-point range established overnight, and needs to decisively break either 10,300 or 10,200 to signal the next leg. Prior NY close was around 10,300, so we’re underperforming modestly.

    What’s driving it: UK CPI data released this morning has fueled a dovish repricing of BOE expectations, sending gilt yields lower. Headline CPI came in at 2.8%, significantly below the 3.0% forecast. The downside surprise in inflation is weighing on the Footsie, particularly as markets now anticipate fewer rate hikes this year. Rising US real yields, driven by a small pop in 10Y yields, are also a mild headwind.

    • UK CPI undershot expectations by 0.2%, triggering a dovish BOE repricing.
    • Markets now price in fewer than two BOE rate hikes by December.
    • FTSE underperforming European peers, suggesting domestic factors are at play rather than a broad risk-off move.

    NY session focus: Focus will be on the Monetary Policy Report Hearings at 14:15 London, where further clues about the BOE’s outlook will be sought. Key level to watch is 10,200, a break of which could trigger further downside. A sustained move above 10,300 would negate the negative bias. The trade that’s working is short gilts; the trade that’s at risk is long financials if the BOE leans further dovish. The pain trade is a hawkish surprise from the MPC hearings after the weak inflation print.

  • Pound/Yen Strength Continues as UK Inflation Eases – Wednesday, 20 May

    Snapshot: GBP/JPY is currently bid around 194.20, building on earlier gains after UK CPI data surprised to the downside. Easing inflationary pressures reduce the urgency for further BoE tightening, although the MPC remains data-dependent.

    • Watch 194.50, a break of which could trigger further upside.
    • The 14:15 London Monetary Policy Report Hearings presents headline risk.

    Bias into NY: We favour further upside in GBP/JPY while UK data supports a more dovish BoE path, targeting 194.75. A firmer dollar tone should not derail the overall bullish sentiment in the pair.

  • NY Session Tactical Brief – Tuesday, 19 May

    Regime: Mixed — VIX at 18.43 signals ongoing unease, but rising US yields underpin USD strength, offsetting risk aversion.

    Today’s market themes:

    • USD dominance: Rising US yields and safe-haven demand continue to buoy the Dollar across the board.
    • Inflation watch: Canadian CPI data offers key test for BoC rate-cut expectations.
    • Positioning unwind: Crowded longs in AUD and Copper face disappointment risk from China slowdown fears.

    The setup: The market is pricing in a hawkish Fed, driving the USD higher, with USD/JPY approaching multi-decade highs near 159.15. The trade is to fade crowded shorts in Nasdaq and Yen while selling AUD on weak data. The risk is a surprise dovish signal from the Fed, triggering a rapid unwinding of USD longs.

    Watch list (native time per event):

    • 11:30 AEST AUD: Monetary Policy Meeting Minutes
    • 08:30 ET CAD: CPI m/m (forecast 0.7%, prior 0.9%)
    • 10:00 ET USD: Pending Home Sales m/m (forecast 1.0%, prior 1.5%)

    Bias by asset:

    • DXY:
      • Direction: Higher
      • Domestic (US): US yields climbing; hawkish Fed repricing.
      • Cross: Safe-haven demand, global uncertainty boosting USD.
      • Levels: Support 119.00, Resistance 119.50.
    • EUR/USD:
      • Direction: Lower
      • Domestic (EU): Dovish ECB outlook weighing on the Euro.
      • Cross: DXY strength, US-DE 10Y widening.
      • Levels: Support 1.1600, Resistance 1.1700.
    • GBP/USD (Cable):
      • Direction: Lower
      • Domestic (UK): BoE reluctance, claimant count.
      • Cross: DXY strength, risk off sentiment, US-UK 10Y.
      • Levels: Support 1.2450, Resistance 1.2550.
    • USD/JPY:
      • Direction: Higher
      • Domestic (JP): BoJ remains dovish; intervention risk grows.
      • Cross: US 10Y surging, DXY strength amplifying the move.
      • Levels: Support 158.50, Resistance 160.00.
    • USD/CAD (Loonie):
      • Direction: Higher
      • Domestic (CA): CPI miss will trigger BOC dovish repricing.
      • Cross: DXY strength, watching US-CA 10Y spread.
      • Levels: Support 1.3700, Resistance 1.3750.
    • AUD/USD (Aussie):
      • Direction: Lower
      • Domestic (AU): RBA cautious, meeting minutes confirm dovish stance.
      • Cross: DXY strength, China growth concerns.
      • Levels: Support 0.6600, Resistance 0.6650.
    • NZD/USD (Kiwi):
      • Direction: Lower
      • Domestic (NZ): RBNZ easing bias entrenched.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 0.5800, Resistance 0.5850.
    • USD/CHF (Swissy):
      • Direction: Higher
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength, safe-haven flows supporting.
      • Levels: Support 0.7850, Resistance 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: sideways, EUR/JPY: higher, GBP/JPY: higher
      • Domestic: Relative hawkish BoE to ECB; JPY still dovish.
      • Cross: DXY strength, risk aversion affecting the crosses.
      • Levels: EUR/GBP: 0.8500-0.8550, EUR/JPY: 170.00-171.00, GBP/JPY: 193.50-194.50.
    • XAU (Gold):
      • Direction: Lower
      • Domestic (asset-specific): Rising real yields weighing on gold.
      • Cross: DXY strength.
      • Levels: Support $4,520, Resistance $4,560.
    • XAG (Silver):
      • Direction: Lower
      • Domestic (asset-specific): Industrial demand mixed, gold ratio flat.
      • Cross: DXY strength, risk aversion.
      • Levels: Support $31.00, Resistance $32.00.
    • WTI / Brent:
      • Direction: Sideways
      • Domestic (asset-specific): US-Iran talks weighing.
      • Cross: DXY strength, risk aversion muted.
      • Levels: WTI: $100-103, Brent: $108-112.
    • Copper:
      • Direction: Lower
      • Domestic (asset-specific): China growth worries, LME stock build.
      • Cross: DXY strength, global growth proxy weak.
      • Levels: Support $4.80, Resistance $4.90.
    • SPX:
      • Direction: Lower
      • Domestic (US): Rising yields, earnings season fades.
      • Cross: Elevated VIX, global risk concerns.
      • Levels: Futures support 5280, resistance 5300.
    • NDX:
      • Direction: Lower
      • Domestic (US): Rising real yields pressuring valuations.
      • Cross: Rate sensitivity elevated, VIX concerns.
      • Levels: Support 19,300, Resistance 19,400.
    • US30 (Dow):
      • Direction: Lower
      • Domestic (US): Earnings less supportive, cyclicals under pressure.
      • Cross: Bond yield reaction negative.
      • Levels: Support 39,800, Resistance 40,000.
    • UK100 (FTSE):
      • Direction: Sideways
      • Domestic (UK): Sterling strength offsetting global weakness.
      • Cross: Global risk tone, US weakness.
      • Levels: Support 8,350, Resistance 8,400.
    • DAX:
      • Direction: Sideways
      • Domestic (DE): German HICP eases, no bullish trigger.
      • Cross: US tech weakness, DXY strength.
      • Levels: Support 24,500, Resistance 24,600.
    • Nikkei:
      • Direction: Lower
      • Domestic (JP): JPY weakness hurting profitability.
      • Cross: US tech weak; no clear up catalyst.
      • Levels: Support 60,000, Resistance 61,000.
    • BTC:
      • Direction: Sideways
      • Domestic (asset-specific): ETF flow slowing, mixed on-chain data.
      • Cross: DXY strength, Nasdaq correlation weighing.
      • Levels: Support $66,000, Resistance $67,000.

    Positioning watch: Crowded longs in AUD (98th percentile) and Copper (98th percentile) expose these assets to significant downside risk if China economic data disappoints or trade tensions escalate. Crowded shorts in Nasdaq (0th percentile) face a squeeze risk if yields drop.

    The pain trade: A surprise dovish turn by the Fed, sparked by weak US data, would trigger a rapid unwinding of USD longs and a rally in equities, catching crowded shorts offside.

  • Cable Remains Under Pressure Amid Mixed UK Data – Tuesday, 19 May

    Where we are: GBP/USD is currently trading around 1.2485, consolidating losses from the overnight session. The pair traded in a tight range overnight, failing to break above 1.2510 resistance. The price sits well below the prior NY close of 1.2520, reflecting the ongoing bearish sentiment.

    What’s driving it: Sterling remains on the defensive after this morning’s mixed bag of UK data. While the Claimant Count Change came in slightly below expectations at 23.1K, signalling some tightness in the labour market, the Average Earnings Index held steady at 3.8%, failing to provide the dovish signal the BoE needs to justify a rate cut. The persistent stickiness of wages keeps the MPC in a holding pattern, as highlighted by the 8-1 vote at the last meeting where Dhingra dissented for a cut. Hawkish repricing in US yields is adding further pressure to Sterling as the 2-year yield sits above 4.09%.

    • BoE Governor Bailey has repeatedly stressed the importance of services CPI in determining the future path of monetary policy, placing increased scrutiny on upcoming inflation releases.
    • CFTC data shows net non-commercial GBP positions remain moderately short, but at the 35th percentile for the year, there is little risk of an imminent short squeeze.
    • Worries on gilts, rising public debt, and increased hedge fund activity have sparked some vulnerabilities in the bond market, as reported by the FT.

    NY session focus: The market will be closely watching the 10:00 ET release of US Pending Home Sales m/m, with expectations of a 1.0% increase. A strong print could further fuel dollar strength and pressure Cable lower, potentially testing support around 1.2450. Resistance remains around 1.2510. The current trade is short Cable on rallies toward 1.2500, while longs are at risk until we see a clear dovish shift from the BoE or a significant reversal in US yields. The pain trade for GBP/USD is a surprise downside print in US data that triggers a sharp dollar selloff and allows Cable to break above 1.2550.

  • FTSE 100 Consolidates Gains Amid Cautious Optimism – Tuesday, 19 May

    Where we are: The FTSE 100 is trading around 8,395 in early London trade, consolidating gains made in the previous session. The index is holding above its 50-day moving average and is within striking distance of recent highs. The overnight range has been relatively tight as traders await fresh catalysts from across the Atlantic.

    What’s driving it: UK inflation figures, while still above target, are showing signs of stickiness. The latest CPI print came in at 3.3% YoY, a modest increase from the previous 3%, and core CPI remained unchanged at 3.2%. This suggests the Bank of England may maintain its current cautious stance on monetary policy, with the market currently pricing in a higher probability of a rate hold in the near term. This expectation is slightly offsetting the positive sentiment stemming from improved risk appetite and stabilization in global oil prices, as domestic rates are being kept higher for longer.

    • Claimant Count Change data is due to be released at 07:00 London; forecast is 23.1K, with previous at 26.8K — a better-than-expected print may suggest further strength in employment.
    • Average Earnings Index, also at 07:00 London, is expected to remain unchanged at 3.8% — a higher print could reignite wage-price spiral concerns.
    • The FCA and Bank of England’s joint vision on tokenisation suggests an innovative approach to financial markets which may be a positive catalyst for the FTSE 100 long term, even if current impact is minor.

    NY session focus: All eyes will be on US 2Y and 10Y yield curve movements. The VIX continues to trade around 18, which means the market is still seeing some risk as the US 10Y real yield rose to 2.1% on Friday. No major US data releases are scheduled before the NY session opens, meaning that pre-existing sentiment will likely dominate the trading landscape. Key levels to watch for the FTSE 100 are 8,350 for support and 8,450 for resistance. The current trade is to continue to hold long FTSE positions, but the risk trade is any hawkish communication from the Federal Reserve. The pain trade for the FTSE 100 would be a rapid and unexpected rally in the DXY alongside a sharp decline in Brent crude prices, exacerbating inflation concerns.

  • Guppy Primed for Further Upside on BoJ/BoE Divergence – Tuesday, 19 May

    Snapshot: GBP/JPY is steady around 194.20, building on yesterday’s gains. The BoE’s cautious stance, highlighted by the 8-1 vote to hold rates steady, continues to contrast with the BoJ’s slow normalisation bias, keeping upward pressure on the pair. This morning’s UK earnings data and claimant count will be key in shaping expectations for the next BoE meeting.

    • Watch 194.50; a sustained break could open the way to 195.00.
    • A significant downside surprise in UK earnings data at 07:00 London could quickly reverse recent gains.

    Bias into NY: Bullish. The widening policy divergence between the BoE and BoJ continues to favour further upside in GBP/JPY; a test of 194.50 looks likely, with the potential to extend gains towards 195.00 if risk appetite remains stable. Higher US Treasury yields lend only marginal support.