Category: UK

  • NY Session Tactical Brief – Monday, 18 May

    Regime: Risk-off, driven by rising real yields as 10Y TIPS push above 2% and oil climbs to $105, pressuring equities.

    Today’s market themes:

    • Real-yield repricing and inflation fears weighing on risk assets.
    • Geopolitical tensions in Middle East adding to oil supply concerns.
    • Watch for signs of USD/JPY intervention as pair tests 159.

    The setup: Rising real yields are the dominant driver, pressuring risk assets. Focus on the US 10Y TIPS yield, currently at 2%, as it sets the tone. A break above 2.1% could trigger further equity sell-off and dollar strength. Trade: short SPX futures, stop above 5300. Risk: surprising dovish Fed commentary.

    Watch list (native time per event):

    • 08:30 ET US Retail Sales (m/m) Forecast: 0.4%, Prior: 0.7%
    • 10:00 ET US NAHB Housing Market Index Prior: 51
    • 11:00 CET ECB President Lagarde Speaks

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Hawkish Fed rhetoric, rising US yields
      • Cross: Risk-off sentiment, safe-haven demand
      • Levels: Support 117.80 / Resistance 118.30
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Weak German data, dovish ECB comments
      • Cross: Stronger DXY, widening US-DE 10Y yield spread
      • Levels: Support 1.0800 / Resistance 1.0850
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): Cautious BoE stance, weak data prints
      • Cross: Stronger DXY, risk-off flows
      • Levels: Support 1.2550 / Resistance 1.2620
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): BoJ dovish, rising JGB yields, intervention watch
      • Cross: Rising US 10Y, DXY strength, risk-off
      • Levels: Support 158.50 / Resistance 159.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC holds, CPI is soft, rangebound
      • Cross: Stronger DXY, US-CA 10Y spread widening
      • Levels: Support 1.3650 / Resistance 1.3700
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): Hawkish RBA stance but crowded long positioning
      • Cross: Stronger DXY, weaker China growth, US-AU spread
      • Levels: Support 0.7050 / Resistance 0.7120
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ easing bias, weakening economic momentum
      • Cross: Stronger DXY, risk aversion, US-NZ yield divergence
      • Levels: Support 0.5800 / Resistance 0.5850
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB neutral, CPI contained
      • Cross: DXY strength, safe-haven unwinding
      • Levels: Support 0.7800 / Resistance 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Neutral, EUR/JPY Bearish, GBP/JPY Neutral
      • Domestic: Diverging central bank policies, relative yield spreads
      • Cross: DXY strength, risk regime dynamics
      • Levels: EUR/GBP 0.8500-0.8550, EUR/JPY 169.50-170.50, GBP/JPY 192.00-193.00
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields, soft CB demand
      • Cross: Stronger DXY, risk-off environment
      • Levels: Support $4,500 / Resistance $4,550
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Weaker industrial demand, high Gold-Silver ratio
      • Cross: Stronger DXY, risk aversion
      • Levels: Support $30.00 / Resistance $31.00
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Tight supply, geopolitics, rising demand
      • Cross: Risk-off, inflation hedge
      • Levels: WTI Support $100 / Resistance $105
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): Weak China, rising LME stocks
      • Cross: DXY strength, global growth concerns
      • Levels: Support $5.00 / Resistance $5.10
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising yields, Fed outlook
      • Cross: VIX elevated, global risk-off
      • Levels: Futures 5285, support 5250, resistance 5300 cash
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yields pressure valuations
      • Cross: Rates sensitivity, VIX
      • Levels: Support 18,100 / Resistance 18,300
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Earnings cyclical concerns, yields
      • Cross: Bond-yield reaction
      • Levels: Support 39,700 / Resistance 40,000
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Mixed data, Gilt yields
      • Cross: Global risk, US tone
      • Levels: Support 8,400 / Resistance 8,450
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Weak German data, rising Bund yields
      • Cross: US tech, DXY, risk regime
      • Levels: Support 23,600 / Resistance 23,800
    • Nikkei:
      • Direction: Bearish
      • Domestic (JP): Strong JPY, rising JGB yields, BoJ stance
      • Cross: US tech, risk regime
      • Levels: Support 60,500 / Resistance 61,000
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): ETF outflows
      • Cross: DXY, risk regime, Nasdaq correlation
      • Levels: Support $60,000 / Resistance $62,000

    Positioning watch: AUD and Copper are crowded long at >98th percentile, creating significant squeeze risk if US data surprises to the upside or China stimulus disappoints. Nasdaq is crowded short at the 0th percentile, vulnerable to a rally.

    The pain trade: A dovish surprise from a Fed speaker would ignite a risk rally, squeezing crowded short positions in Nasdaq and causing dollar weakness.

  • Cable Under Pressure as Political Risk Weighs – Monday, 18 May

    Where we are: GBP/USD is currently trading around 1.2585, testing the lower end of its recent range. Cable has traded in a tight overnight range of 1.2570-1.2610, and remains below Friday’s New York close of 1.2630. The pair is struggling to gain traction as political uncertainty and the potential for a less market-friendly government weigh on sentiment.

    What’s driving it: Sterling is under pressure due to rising political uncertainty surrounding the potential entry of Andy Burnham into the leadership race. The prospect of Burnham, perceived as less aligned with bond market interests, is fueling concerns among investors. Adding to the negative sentiment, gilt yields remain elevated, reflecting the market’s anxiety over future fiscal policy. The current cautious stance of the Bank of England, evidenced by the 8-1 vote to hold rates at 4.50% and the MPC’s data-dependent approach, provides little support for the Pound.

    • The potential leadership challenge from Andy Burnham is stoking fears of less market-friendly fiscal policies.
    • The Bank of England’s cautious stance, with one MPC member dissenting for a rate cut, is keeping a lid on Sterling gains.
    • CFTC data shows that net non-commercial GBP positioning is moderately short at -43,059 contracts, representing -15.2% of open interest — leaving Cable exposed to further downside.

    NY session focus: Traders will be closely monitoring any further developments in the UK political landscape for potential catalysts to push Sterling lower. Keep an eye on the US 2-year yield, currently at 4%, for signals of a broader risk-off move that could exacerbate GBP weakness. Support lies at 1.2550, with a break below opening the door to 1.2500. Resistance is at 1.2630, the prior NY close. The trade that’s working is fading Cable rallies. The trade at risk is chasing Cable lower without accounting for short positioning and potential for a squeeze. The pain trade is a coordinated global rates rally that catches GBP shorts off guard.

  • Footsie Range-Bound, Awaiting Catalyst from US Data – Monday, 18 May

    Where we are: The FTSE 100 is trading flat around 8,420 in early London trading, contained within a narrow 20-point overnight range. This is slightly below Friday’s New York close of 8,430, with initial support around 8,400 and resistance at 8,450.

    What’s driving it: The UK domestic picture is mixed. While the Bank of England is exploring tokenisation in wholesale markets and cost-reducing ring-fence changes, the macro backdrop continues to show sticky inflation, with March CPI at 3.3% YoY. Despite this, the unemployment rate saw a positive surprise, dropping to 4.9% in January. Rising oil prices are providing a boost to energy heavyweights like BP and Shell, lending some support to the index, but broader market sentiment remains cautious. The upward move in US real yields is adding to headwinds for risk assets.

    • The Bank of England’s focus on tokenisation signals a forward-looking approach to financial market infrastructure.
    • Falling UK unemployment provides a glimmer of hope amidst inflationary pressures.
    • Relatively high WTI crude (above $100) and resulting oil-sector gains, are masking deeper weakness in the index.

    NY session focus: All eyes will be on the US data releases this morning, although no high-impact prints are scheduled before the NY open. Traders will be watching US Treasury yields and the dollar index for broader risk sentiment cues; a break above 118.10 in the DXY could trigger further FTSE downside. Key levels to watch are 8,400 for support and 8,450 for resistance. The trade that’s working is still long energy names, but this is increasingly vulnerable to a broader risk-off move. The pain trade for the FTSE 100 is a surprise dovish shift in US monetary policy expectations sending yields lower and risk appetite soaring.

  • Guppy Faces Downside Pressure as BoJ Looms – Monday, 18 May

    Snapshot: GBP/JPY trades near 192.50, pressured by a cautious Bank of England stance and rising intervention risks from the Bank of Japan. The BoE’s reluctance to signal rate cuts amidst sticky services inflation is weighing on Sterling. Today’s focus shifts to potential BoJ communication as Yen weakness persists.

    • Watch for a break below 192.00, signalling further downside as BoJ pressure ramps.
    • Risk: Any hawkish BOJ whispers could spark a sharp Guppy reversal.

    Bias into NY: Downside favoured below 192.50 as the BoJ’s intervention risk grows; a sustained break could target 191.50 as USD strength and rising US real yields amplify the Yen’s appeal.

  • NY Session Tactical Brief – Friday, 15 May

    Regime: Risk-off, driven by rising oil prices and inflation worries spooking bond markets, pushing US 2Y yields to 3.98%.

    Today’s market themes:

    • Oil supply scare: Strait of Hormuz tensions driving WTI above $104, fueling inflation concerns.
    • Global bond selloff: Rising oil and inflation fears triggering broad-based bond yield increases.
    • USD strength: Dollar continues to rally on Fed hike expectations, nearing best week since March.

    The setup: Oil supply disruptions are the dominant driver, pushing inflation expectations higher and triggering a global bond selloff. The trade is to fade equity rallies, especially in growth names, as real yields rise. Risk is a de-escalation in Middle East tensions, sending oil and yields lower.

    Watch list (native time per event):

    • 08:30 ET US PPI (Prior: +0.2%)
    • 10:00 ET US University of Michigan Consumer Sentiment (Prior: 77.2)
    • 15:00 CET ECB’s Lagarde speaks

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Hawkish Fed bets, resilient US data, rising US yields.
      • Cross: Global risk aversion, flight to safety, EUR/USD weakness.
      • Levels: Support 98.50, Resistance 99.50
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Dovish ECB, persistent inflation challenges, peripheral stress.
      • Cross: Strong DXY, widening US-DE 10Y yield spread, risk-off sentiment.
      • Levels: Support 1.1600, Resistance 1.1700
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): BoE hawkishness priced in, potential for dovish repricing, Gilt underperformance.
      • Cross: Strong DXY, widening US-UK 10Y yield spread, risk aversion.
      • Levels: Support 1.3350, Resistance 1.3450
    • USD/JPY:
      • Direction: Neutral
      • Domestic (JP): BoJ remains dovish, intervention threat looms, JGBs constrained.
      • Cross: Rising US 10Y yield, strong DXY, risk aversion.
      • Levels: Support 157.50, Resistance 158.50
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC’s cautious stance, CPI remains elevated, sensitive to oil price swings.
      • Cross: Strong DXY, widening US-CA 10Y yield spread.
      • Levels: Support 1.3650, Resistance 1.3750
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA reluctance to tighten aggressively, iron ore price concerns.
      • Cross: Strong DXY, China slowdown fears, risk-off sentiment.
      • Levels: Support 0.7150, Resistance 0.7250
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ easing bias firmly entrenched, Dairy prices remain weak.
      • Cross: Strong DXY, risk aversion.
      • Levels: Support 0.5800, Resistance 0.5900
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB likely to maintain dovish stance, moderate Swiss yields.
      • Cross: Strong DXY, risk aversion driving safe-haven flows out of CHF.
      • Levels: Support 0.7800, Resistance 0.7900
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Bearish, EUR/JPY: Bearish, GBP/JPY: Neutral
      • Domestic: BoE remains relatively more hawkish than ECB/BoJ, yield divergence supports GBP.
      • Cross: DXY strength, risk aversion, cross-of-crosses flows impacting correlations.
      • Levels: EUR/GBP: R: 0.8550 S: 0.8500; EUR/JPY: R: 171.00 S: 170.50; GBP/JPY: R: 193.00 S: 192.50
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields, lower breakevens weighing on gold.
      • Cross: Strong DXY, risk-off sentiment limited support.
      • Levels: Support $4,575, Resistance $4,600
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Weak industrial demand, Gold-Silver ratio trending higher.
      • Cross: Strong DXY, risk aversion exacerbating downside.
      • Levels: Support $4,450, Resistance $4,500
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Strait of Hormuz tensions, potential supply disruptions, inventories tight.
      • Cross: Weaker DXY providing some offset to risk-off flows.
      • Levels: WTI: S: $102, R: $105; Brent: S: $106, R: $109
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns, LME stocks elevated, supply outlook improving.
      • Cross: Strong DXY, risk-off sentiment weighing on industrial metals.
      • Levels: Support $9,800, Resistance $10,000
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising real yields, concerns about future earnings growth.
      • Cross: Elevated VIX, global risk-off sentiment weighing on equities.
      • Levels: Futures: Support 5220, Resistance 5280
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yield sensitivity, mega-cap valuations stretched, AI hype fading.
      • Cross: Rates sensitivity, elevated VIX indicating heightened volatility.
      • Levels: Support 19500, Resistance 19700
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Concerns about future earnings growth, pressure on cyclical sectors.
      • Cross: Rising bond yields impacting valuations.
      • Levels: Support 39500, Resistance 40000
    • UK100 (FTSE):
      • Direction: Bearish
      • Domestic (UK): Stronger Sterling weighing, Gilt yields rising, commodity sector under pressure.
      • Cross: Global risk aversion, US tone dragging on sentiment.
      • Levels: Support 8350, Resistance 8400
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Rising Bund yields, weak IFO/ZEW survey data, EU growth concerns.
      • Cross: US tech weakness, DXY strength, risk-off sentiment.
      • Levels: Support 24100, Resistance 24300
    • Nikkei:
      • Direction: Bearish
      • Domestic (JP): Stronger JPY weighing, BoJ under pressure to act, JGB yield curve flattening.
      • Cross: US tech weakness, risk aversion.
      • Levels: Support 38500, Resistance 39000
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): Elevated funding rates, ETF flows slowing, on-chain metrics mixed.
      • Cross: Strong DXY, risk aversion, Nasdaq correlation weighing on sentiment.
      • Levels: Support $61,000, Resistance $63,000

    Positioning watch: AUD and Bitcoin are crowded longs (>95th percentile) vulnerable to disappointment if risk aversion intensifies or data disappoints, creating squeeze risk. JPY is a crowded short (<15th percentile) and could rally hard if the BoJ surprises or intervention occurs.

    The pain trade: A de-escalation in Middle East tensions, leading to a sharp drop in oil prices and a rally in risk assets, would hurt crowded short positions in bonds and crowded long positions in the dollar.

  • Sterling Under Pressure as Political Risks Rise – Friday, 15 May

    Where we are: GBP/USD is trading near 1.3385, testing lows not seen since early April. Overnight, Cable ranged between 1.3370 and 1.3430, remaining on the defensive. The pair is trading notably below the previous New York close, weighed down by concerns about UK political stability and a broad risk-off sentiment.

    What’s driving it: The pound is under pressure primarily due to growing domestic political uncertainty and its potential impact on fiscal policy. Concerns are mounting that Andy Burnham may challenge Keir Starmer, raising the spectre of looser borrowing limits and higher gilt yields; the UK 10-year yield has already hit its highest level since 2008. This downside is compounded by Trump’s comments pushing crude oil higher, fuelling inflation worries and necessitating further BoE rate hikes, of which the market already anticipates 70bp this year. The US 2Y yield is modestly lower at 3.98%, failing to offer Cable any respite.

    • UK 10-year gilt yields reaching levels not seen since 2008 indicates substantial market anxiety regarding UK fiscal outlook.
    • CFTC data reveals a crowded net-short positioning in GBP, with -63,908 contracts representing the 15th percentile, increasing the risk of a squeeze.
    • The Bank of England’s cautious stance, demonstrated by an 8-1 vote to hold rates steady at 4.50% at their last meeting, is failing to support the currency amid political turbulence.

    NY session focus: Traders will be closely monitoring any further developments regarding the UK political situation, along with broader risk sentiment driven by news flow out of the US. The 08:30 ET US data dump will provide short term direction. Key levels to watch are 1.3350 on the downside and 1.3430 as initial resistance. The short Sterling trade is currently working, while any long Cable positions are under considerable pressure. The pain trade would be a hawkish surprise from Huw Pill reversing the Sterling weakness.

  • Footsie Weakness Persists Amid Inflation Concerns – Friday, 15 May

    Where we are: The FTSE 100 currently trades around 8,370, down roughly 0.5% on the session. The index saw a modest bounce in the prior two sessions but failed to hold gains, trading in a relatively tight 50-point range overnight. This level is significantly below the recent highs and suggests continued selling pressure below the psychological 8,400 level.

    What’s driving it: Renewed inflation concerns are weighing on the Footsie. The March CPI print of 3.3% year-on-year, a 0.3% increase from the previous month, and the corresponding CPIH figure of 3.4% are raising questions about the Bank of England’s ability to control inflation, despite the drop in the unemployment rate to 4.9%. This has created a risk-off sentiment, compounded by political uncertainty surrounding a potential leadership challenge.

    • UK CPI YoY increased to 3.3% in March, exceeding expectations and fueling inflation fears.
    • The UK Unemployment Rate decreased to 4.9% in January, but the inflation data overshadows this positive economic signal.
    • Mining and banking sectors are leading the decline, suggesting a broad-based sell-off driven by macroeconomic concerns.

    NY session focus: With no major UK data releases scheduled before the New York close, focus will likely be on the performance of US equities and movement in US Treasury yields, which are already showing a slight dip with the 2Y at 3.98%. Keep an eye on the 10-year Gilt yield relative to US Treasuries for directional cues. A break below 8,350 could open the door to further downside. The pain trade would be a surprise hawkish pivot from the Bank of England in response to persistent inflationary pressures, triggering a sharp rally in Sterling and a squeeze in UK equities.

  • Guppy Faces BoJ Pushback Despite UK Wage Resilience – Friday, 15 May

    Snapshot: GBP/JPY trades near 192.80, largely unchanged on the session. BoJ board member Masu’s overnight comments reiterating the central bank’s commitment to slow normalisation is the key driver. Resilient UK wages continue to support Sterling but face increasing headwinds from Yen strength.

    • Watch for any follow-through from Masu’s speech, particularly around hints of future policy adjustments.
    • UK data remains sparse today; risk events will be driven by fluctuations in broader risk sentiment via US equities.

    Bias into NY: Cautiously bearish GBP/JPY. The BoJ’s commitment to policy normalisation, despite holding rates steady last meeting, is capping upside around 193.00. Further Yen strength will pressure the cross.

  • NY Session Tactical Brief – Thursday, 14 May

    Regime: Mixed; VIX at 17.99 with US yields rising slightly and the DXY consolidating gains around 118.15 indicates a tentative risk-neutral stance.

    Today’s market themes:

    • Trump-Xi meeting impact: assessing US-China trade and oil relationship, especially regarding Iran sanctions.
    • US Retail Sales: markets are awaiting direction with Retail Sales release.
    • Crowded trades: the market is set up for a potential short squeeze, with several currencies and asset classes showing heavily skewed positioning.

    The setup: Traders are positioned for USD strength and are short GBP, JPY, and NZD. US retail sales data will be key to either confirming this bias or triggering a squeeze. Watch US 10Y yields; sustained move above 4.5% could exacerbate USD strength.

    Watch list (native time per event):

    • 07:00 London GBP: GDP m/m (forecast -0.1%, prior 0.5%)
    • 08:30 ET USD: Core Retail Sales m/m (forecast 0.7%, prior 1.9%)
    • 08:30 ET USD: Retail Sales m/m (forecast 0.5%, prior 1.7%)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Data dependent on Retail Sales, Fed policy on inflation.
      • Cross: Risk sentiment / global growth outlook drive flows
      • Levels: Support 117.80 / Resistance 118.30
    • EUR/USD:
      • Direction: Neutral
      • Domestic (EU): ECB rhetoric, EU data release sensitive to global narrative.
      • Cross: DXY strength, US-DE 10Y spread.
      • Levels: Support 1.1680 / Resistance 1.1740
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): GDP print spurring rate cut bets, Gilt yield declines.
      • Cross: DXY strength / US-UK 10Y widening
      • Levels: Support 1.2450 / Resistance 1.2520
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): BoJ’s hawkish tone not enough to combat carry demand.
      • Cross: US 10Y strength / risk-on / intervention watch
      • Levels: Support 157.50 / Resistance 158.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC policy path, oil price fluctuations are the driver.
      • Cross: DXY strength / US-CA 10Y differential.
      • Levels: Support 1.3680 / Resistance 1.3740
    • AUD/USD (Aussie):
      • Direction: Neutral
      • Domestic (AU): RBA policy path / key commodity prices affecting sentiment.
      • Cross: DXY correlation, China growth, US-AU 10Y
      • Levels: Support 0.7170 / Resistance 0.7230
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ dovish stance is the driver.
      • Cross: DXY direction, Risk / US-NZ 10Y
      • Levels: Support 0.5900 / Resistance 0.5950
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB’s easing policy stance.
      • Cross: DXY strength, safe-haven demand fluctuation.
      • Levels: Support 0.7800 / Resistance 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Neutral, EUR/JPY Neutral, GBP/JPY Bearish
      • Domestic: Rate spreads/relative central bank stance
      • Cross: Risk, cross-of-crosses
      • Levels: Watch relative breaks; range trades
    • XAU (Gold):
      • Direction: Neutral
      • Domestic (asset-specific): Real yields are the driver.
      • Cross: DXY influence, risk sentiment.
      • Levels: Support 4670 / Resistance 4700
    • XAG (Silver):
      • Direction: Neutral
      • Domestic (asset-specific): Gold-Silver ratio influences direction.
      • Cross: DXY influence, risk correlation.
      • Levels: Support 30.40 / Resistance 30.70
    • WTI / Brent:
      • Direction: Neutral
      • Domestic (asset-specific): Supply/demand influences, WTI-Brent Spread affects trend.
      • Cross: DXY influence, risk sentiment.
      • Levels: Support 100.50 / Resistance 102.50
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China growth outlook is the main driver.
      • Cross: Global growth sentiment.
      • Levels: Support 5.00 / Resistance 5.10
    • SPX:
      • Direction: Bullish
      • Domestic (US): Earnings, Fed policy influences market direction.
      • Cross: Risk regime, Global Tone, yields correlation.
      • Levels: Futures level Support 5330 / Resistance 5350.
    • NDX:
      • Direction: Bullish
      • Domestic (US): Mega-cap earnings are a major factor.
      • Cross: Rates / Volatility (VIX).
      • Levels: Support 18,750 / Resistance 18,850
    • US30 (Dow):
      • Direction: Bullish
      • Domestic (US): Industrial / Financial earnings support this.
      • Cross: Bond yield / overall market tone affecting direction.
      • Levels: Support 50,000 / Resistance 50,250
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Domestic-centric influences such as Sterling performance.
      • Cross: Market Sentiment / US tone impacting direction.
      • Levels: Support 8,400 / Resistance 8,450
    • DAX:
      • Direction: Bullish
      • Domestic (DE): Domestic sentiment and yields.
      • Cross: US tech impacts, DXY correlation.
      • Levels: Support 24,350 / Resistance 24,450
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY impacts, BOJ policy stance.
      • Cross: US tech influence, global risk factors.
      • Levels: Support 38,800 / Resistance 39,200
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flow / on-chain metrics drive direction.
      • Cross: Risk sentiment & Nasdaq performance impact.
      • Levels: Support 61,500 / Resistance 62,500

    Positioning watch: AUD/USD, Copper, and Bitcoin are crowded longs, creating squeeze risk if data disappoints; GBP, JPY, and NZD are crowded shorts, vulnerable to upside surprises. CFTC shows dollar index positioning very stretched.

    The pain trade: A dovish tilt from the Fed combined with strong UK data and a resolution of Iran tensions would trigger a massive short squeeze in GBP, JPY, NZD, Gold, and rates.

  • Cable Pressured by Political Risk Despite UK GDP Surprise – Thursday, 14 May

    Where we are: GBP/USD is currently trading around 1.2480, hovering near its weakest level since late April. The pair traded in a tight overnight range of 1.2460-1.2500, and is slightly below yesterday’s New York close of 1.2495. The 1.2450 level remains key support, with a break opening the door to further declines.

    What’s driving it: Despite a better-than-expected UK GDP print this morning (0.6% q/q vs 0.1% prior), Sterling is struggling under the weight of mounting political uncertainty following Wes Streeting’s resignation and potential leadership challenge. This overshadows the positive macro data, highlighting the market’s sensitivity to domestic political risks. The Bank of England’s cautious stance, reflected in the recent 8-1 vote to hold rates steady, provides little support, as the MPC remains data-dependent and reluctant to commit to a cut path. Rising US Treasury yields, with the 2Y at 4% and the 10Y at 4.46%, are also weighing on Cable.

    • UK GDP m/m came in at 0.5% vs. -0.1% forecast, indicating unexpected strength in the economy.
    • Political uncertainty escalates with the likely leadership challenge against PM Starmer, increasing pressure on the Pound.
    • CFTC data reveals a crowded short positioning in GBP, with net non-commercial positions at -63,908 contracts, a potential squeeze risk if positive news emerges.

    NY session focus: All eyes are now on the 08:30 ET US Retail Sales data. Strong prints could further bolster the dollar and pressure Cable lower, while a miss could offer some respite. We’ll also be watching US Unemployment Claims at 08:30 ET. Key levels to watch are 1.2450 on the downside and 1.2520 as initial resistance. The trade that’s working is fading any Cable rallies into USD strength. The trade at risk is a short squeeze fuelled by weaker-than-expected US data. The pain trade is Cable breaking above 1.2550 and running towards 1.2600 as political risk recedes.

  • Footsie Buoyed by GDP Beat; Inflation Still a Concern – Thursday, 14 May

    Where we are: The FTSE 100 is trading around 8,420, up slightly on the session. It has traded in a relatively narrow range overnight, generally tracking European sentiment, and is holding above yesterday’s New York close. Immediate resistance is around 8,450, with support around 8,380.

    What’s driving it: The UK economy grew by 0.6% in Q1, significantly exceeding the 0.1% previously recorded and consensus forecasts of 0.1%. March also surprised to the upside with growth of 0.3% versus forecasts for a 0.1% contraction. However, inflation remains a concern, as evidenced by recent CPI prints, potentially limiting the extent of any sustained rally despite the GDP upside. Firmer US Treasury yields, with the 10-year at 4.46%, are providing a mixed influence, as they attract capital but also reflect a hawkish Fed backdrop.

    • UK GDP m/m printed at 0.3% versus -0.1% forecast, signaling a stronger-than-expected economic rebound.
    • UK Unemployment Rate unexpectedly dropped to 4.9%, suggesting a resilient labor market that could maintain wage pressure.
    • Several FTSE 100 heavyweights trading ex-dividend today, partially offsetting the positive GDP news, creating a mixed technical picture.

    NY session focus: All eyes will be on how US equities react to the ongoing data flow. Watch for reaction to the 08:30 ET US PPI number. Key levels to watch on the FTSE are 8,380 as initial support and 8,450 as immediate resistance. The ongoing trade is to be long exporters with USD revenue, though a resurgence in risk aversion could threaten this. The pain trade is a sharp move lower driven by a dovish repricing in Fed expectations.

  • Guppy Faces Downside Pressure as BoE Rate Cut Bets Rise – Thursday, 14 May

    Snapshot: GBP/JPY trades near 191.50, down slightly, after weaker-than-expected UK GDP prints this morning spurred increased speculation about an earlier Bank of England rate cut. The 07:00 London GDP releases will be the key focus in early New York trade.

    • A break below 191.00 would signal further downside in GBP/JPY as markets price in a more dovish BoE outlook.
    • Rising US real yields pose a potential headwind to GBP/JPY, particularly if risk sentiment deteriorates and the VIX spikes.

    Bias into NY: Cautiously bearish on GBP/JPY. Disappointing UK GDP coupled with the BoE’s data-dependent stance keeps Sterling vulnerable; a continued bid in US rates would only amplify the downside pressure on the cross.

  • NY Session Tactical Brief – Wednesday, 13 May

    Regime: Mixed — VIX holding near 18.40 amid rising US real yields, capping risk appetite.

    Today’s market themes:

    • Real-rate repricing: Fed nomination vote and PPI data set to dictate the pace of the climb, pressuring gold and growth stocks.
    • Iran War Impact: Ongoing supply disruptions and inventory depletion boosting oil prices, triggering inventory concerns.
    • Crowded FX positions: Extreme positioning in AUD, NZD, JPY and GBP presents squeeze risks on data surprises.

    The setup: Rising real yields are the dominant force. Focus is on US PPI and the Fed nomination vote today to further define the Fed’s path. Watch for a continued bid in US yields to pressure equities and gold, with DXY bid into the European open. Key is whether 10Y TIPS break 2.00%.

    Watch list (native time per event):

    • 08:30 ET USD: Core PPI m/m (forecast 0.3%, prior 0.1%)
    • 08:30 ET USD: PPI m/m (forecast 0.5%, prior 0.5%)
    • 14:30 ET USD: Fed Chair Nomination Vote (forecast Pass, prior —)

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Strong US data supports hawkish Fed, boosting USD.
      • Cross: Risk-off flows and rising US yields underpin the dollar.
      • Levels: Support 117.80, Resistance 118.50.
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Eurozone growth concerns and relatively dovish ECB weigh on EUR.
      • Cross: Stronger USD and widening US-DE yield spread pressure EUR/USD.
      • Levels: Support 1.0760, Resistance 1.0820.
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): BoE easing expectations, pressured by persistent inflation, weigh on the Pound.
      • Cross: Stronger USD and widening US-UK yield spread pressure Cable.
      • Levels: Support 1.2460, Resistance 1.2520.
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): BoJ still dovish relative to Fed; intervention risk lingers.
      • Cross: Higher US yields drive USD/JPY higher despite intervention risks.
      • Levels: Support 157.75, Resistance 158.50.
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): WTI price volatility offsets CAD strength from BoC rate cuts.
      • Cross: USD strength and widening US-CA yield spreads favor upside.
      • Levels: Support 1.3650, Resistance 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA easing expectations and weak CPI growth weigh on AUD.
      • Cross: Stronger USD and risk-off sentiment hurt the Aussie.
      • Levels: Support 0.7175, Resistance 0.7225.
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ dovishness and concerns about domestic demand hurt the Kiwi.
      • Cross: Stronger USD and risk-off sentiment weigh on NZD/USD.
      • Levels: Support 0.5900, Resistance 0.5950.
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB intervention unlikely; Swiss yields remain low.
      • Cross: Risk-off flows less supportive with strong USD driving gains.
      • Levels: Support 0.7800, Resistance 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish
      • Domestic: Relative CB stance — BoE slightly more hawkish than ECB. BoJ lags both.
      • Cross: DXY strength benefiting JPY crosses, risk tone dictates flows.
      • Levels: EUR/GBP: 0.8510-0.8560, EUR/JPY: 169.00-170.00, GBP/JPY: 192.80-193.80
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields are a significant headwind.
      • Cross: Stronger USD and risk-off environment further pressure Gold.
      • Levels: Support $4,675, Resistance $4,725.
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Industrial demand is soft, Gold/Silver ratio rising.
      • Cross: Stronger USD and risk-off environment weigh on Silver.
      • Levels: Support $29.00, Resistance $29.50.
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): IEA reports record draw in global oil inventories due to Iran War.
      • Cross: Risk sentiment generally supportive, but DXY strength a cap.
      • Levels: WTI Support $101.00, Resistance $103.00.
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns resurface, LME stocks remain high.
      • Cross: Global growth worries and DXY strength pressure Copper.
      • Levels: Support $5.00, Resistance $5.10.
    • SPX:
      • Direction: Bearish
      • Domestic (US): Higher yields weigh on valuations, focus on earnings.
      • Cross: VIX spikes indicate potential for further downside risk.
      • Levels: Futures support 5200, resistance 5250 (cash: key levels to use).
    • NDX:
      • Direction: Bearish
      • Domestic (US): Mega-cap tech vulnerable to higher real yields.
      • Cross: High rate sensitivity amplifies downside in risk-off environment.
      • Levels: Support 19,500, Resistance 19,700.
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical sector earnings sensitive to rising yields.
      • Cross: Bond yield reaction to data key driver of Dow performance.
      • Levels: Support 39,000, Resistance 39,500.
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling strength offsetting positive global risk sentiment.
      • Cross: Global risk appetite supports, but US tone a key determinant.
      • Levels: Support 8350, Resistance 8400.
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields stable; focus on EU sentiment indicators.
      • Cross: US tech performance influences DAX, DXY strength is a cap.
      • Levels: Support 24,000, Resistance 24,100.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY weakness supports, BoJ policy stance is key.
      • Cross: US tech performance and risk-on sentiment drive Nikkei.
      • Levels: Support 63,000, Resistance 63,500.
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): Funding rates remain elevated, ETF flows slowing.
      • Cross: DXY strength and risk-off sentiment hurt Bitcoin. Nasdaq correlation matters.
      • Levels: Support $62,000, Resistance $63,000.

    Positioning watch: CFTC data shows crowded longs in AUD, Copper, and Bitcoin (above 80th percentile), vulnerable to a squeeze on any downside surprises. Crowded shorts in GBP, JPY and NZD present an upside risk.

    The pain trade: A surprise dovish tilt from the Fed on the nomination vote or a much weaker-than-expected PPI print would trigger a short squeeze in crowded USD shorts and boost risk assets, especially the crowded AUD/USD longs.

  • Sterling pressured by gilt volatility and political uncertainty – Wednesday, 13 May

    Where we are: GBP/USD is trading around 1.2480, holding above the overnight low of 1.2465 but still below yesterday’s NY close near 1.2500. Sterling has been choppy, tracking swings in UK gilt yields amid heightened political jitters. Resistance lies at 1.2520, with support at the 1.2450 level.

    What’s driving it: Domestically, the Pound is struggling under the weight of increased volatility in UK gilts. Political uncertainty surrounding PM Starmer’s leadership is exacerbating the situation, as highlighted by the FT’s “Disinflation disappears” piece citing pressure mounting on the PM. The BoE’s cautious, data-dependent stance is offering little support; the 8-1 vote to hold at 4.50% at the last meeting shows a reluctance to signal a cutting cycle despite the dissent from Dhingra. Rising US real yields, currently at 1.95%, are adding additional headwinds for the Pound.

    • UK gilts facing heavy selling pressure in response to the latest ‘Starmer drama’ (CNBC).
    • Net non-commercial GBP positioning is crowded short at -63,908 contracts, near the 15th percentile, raising the risk of a squeeze on any positive surprise.
    • UK CPI at 3.3% remains elevated, exceeding the Bank of England’s 2% target.

    NY session focus: The immediate focus is on the 08:30 ET US PPI data, where stronger-than-expected figures could trigger a further rally in US Treasury yields and weigh on GBP/USD. Keep an eye on the 14:30 ET Fed Chair Nomination Vote, which is expected to pass without drama, but any surprise outcome could rattle markets. A break below 1.2450 would open the door to further downside, while a sustained move above 1.2520 would suggest a potential short squeeze. The pain trade would be a rally above 1.2600 if Starmer were to unexpectedly quell political doubts.

  • FTSE 100 Outperforms as Takeover Bid Buoys Sentiment – Wednesday, 13 May

    Where we are: The FTSE 100 currently trades around 8395, building on yesterday’s gains and extending its outperformance relative to European peers. The index is attempting to break above the 8400 level, which has acted as resistance recently. The overnight range has been relatively tight, but the bias is clearly to the upside following the Intertek takeover news. Yesterday’s NY close was near 8350.

    What’s driving it: Positive sentiment surrounds the FTSE 100, primarily driven by the Intertek takeover bid, which suggests underlying value is being unlocked in the UK market. Although CPI figures were released in March (3.3% YoY), they are stale and are unlikely to be front of mind today. The better-than-expected unemployment rate data from January continues to support a positive, if backward-looking, view of the UK economy.

    • Intertek’s £10.6bn takeover bid by Swedish firm EQT is injecting fresh capital into the index.
    • The banking sector’s rebound from earlier tax-change fears is adding to the positive momentum, with HSBC, Lloyds, Barclays, NatWest and Standard Chartered all posting gains.
    • Commodity strength is underpinning the resource-heavy FTSE, as copper, aluminium, nickel, and iron ore prices climb, benefiting miners like Rio Tinto and Anglo American.

    NY session focus: US traders will be assessing whether the FTSE’s strength is sustainable or merely a short squeeze driven by takeover activity. Watch for any spillover from US yields (currently the 10Y at 4.42% and rising). The takeover premium for Intertek should keep a floor under the index. Key levels to watch are 8400 as immediate resistance, and 8350 as initial support. The trade that’s working is long the FTSE on dips, while the trade at risk is shorting UK equities against stronger global macro. The pain trade would be a sharp reversal driven by risk-off sentiment triggered by a surprisingly hawkish Fed minutes release later today.