Category: US

  • Dollar Grinds Higher as Warsh Era Begins – Thursday, 14 May

    Where we are: The dollar index is trading near 118.15 in early New York trading, consolidating gains after a firmer overnight session. The DXY continues to benefit from the hawkish repricing, hovering near its highest levels since last week. Key resistance remains at 118.50, with support around 117.80, roughly where it closed yesterday in New York.

    What’s driving it: The confirmation of Kevin Warsh as Fed Chair is the primary driver, stoking expectations for a more aggressive stance on inflation. The market is now fully pricing out any Fed rate cuts this year, and increasingly pricing in a rate hike, fueling the bid for the Greenback. The rise in US 2Y yields to 4% and 10Y yields to 4.46% continues to support the dollar, especially with real yields on TIPS pushing higher to 1.99%, adding pressure to gold. The Trump-Xi summit is adding a layer of uncertainty, but so far the market is focused on the domestic inflation picture and the Fed’s likely response.

    • The 2s10s spread widened by 2bp to 0.48%, reflecting increased term premium.
    • CFTC data shows net non-commercial USD positioning at +693 contracts, but it is still in the 83rd percentile. Given how crowded that long positioning is, there is squeeze risk on any disappointment in the data.
    • The nomination of Warsh itself implies more rate hikes could be priced in, increasing support for USD

    NY session focus: The focus is squarely on the 08:30 ET Retail Sales and Unemployment Claims releases. A strong print in either will reinforce the hawkish narrative and likely push the dollar higher, potentially testing 118.50. Weaker data, however, opens the door to a squeeze on those crowded USD longs. Pay close attention to the market’s reaction to the numbers. The trade continues to be long USD vs EUR or JPY, but the risk is that this gets faded quickly on a dovish surprise. The pain trade is a surprisingly weak inflation print that sparks a rapid unwinding of hawkish Fed bets.

  • S&P 500 Looks to Data After Record Run – Thursday, 14 May

    Where we are: S&P 500 futures are trading around 5345, inching higher after an overnight range between 5330 and 5350. This puts the contract comfortably above yesterday’s NY close and suggests the cash market is set to open at new all-time highs. The risk tone remains constructive, mirroring the late-day bid seen yesterday.

    What’s driving it: The market remains underpinned by resilient earnings and the ongoing AI narrative, with Cisco’s strong results and investment plans adding fuel to the fire. Domestically, the focus is squarely on this morning’s 08:30 ET retail sales data, which will provide further insight into the strength of the consumer and the potential implications for Fed policy. The rise in the US 10Y Real Yield to 1.99% is a potential headwind, but so far the market is shrugging it off.

    • Cisco’s 15% premarket surge after earnings, driven by AI investment plans, exemplifies the market’s continued appetite for tech growth.
    • The US 10Y real yield is pushing higher, trading up 4bp to 1.99%, potentially challenging equity valuations.
    • Speculator positioning in the S&P 500 remains modestly short, but the 77th percentile reading suggests limited room for further shorting.

    NY session focus: All eyes are on the 08:30 ET release of Core Retail Sales and Retail Sales data, alongside Unemployment Claims. A strong print would likely reinforce the hawkish Fed narrative and could pressure equities, while a miss could provide a fresh boost. Key levels to watch are 5330 as initial support and 5360 as the next upside target. The outperformance of tech and AI-related stocks remains the prevailing trade. The pain trade would be a significant hawkish surprise from the retail sales data, triggering a sharp rates selloff and equity correction.

  • Nasdaq 100 to Remain Resilient, Eyes Fresh Highs – Thursday, 14 May

    Where we are: The Nasdaq 100 futures are consolidating gains after yesterday’s record close. Intraday, the index is trading around 19,045, holding onto the momentum fueled by tech sector strength. This is notably above the prior New York close and within striking distance of fresh all-time highs, showing resilience in the face of slightly rising yields.

    What’s driving it: The primary driver remains the robust appetite for AI-related stocks and generally strong earnings from the tech sector, as highlighted by Cisco’s impressive performance. Despite slightly higher Treasury yields, with the 10-year at 4.46% and the 2-year at 4.00%, the market is prioritizing growth prospects in technology. The VIX remains subdued at 17.99, reflecting continued risk-on sentiment despite geopolitical uncertainties.

    • Cisco’s 15% premarket surge after earnings, even with planned job cuts, signals the market’s focus on efficiency and profitability in the tech sector.
    • The clearance for US firms to ship H200 chips to ten Chinese companies underscores easing trade tensions, further boosting sentiment towards tech equities.
    • Speculator positioning in Nasdaq 100 futures remains modestly long at the 2nd percentile, suggesting room for further upside if the rally continues and shorts are forced to cover.

    NY session focus: Today’s key event is the 08:30 ET release of Core Retail Sales and Retail Sales data. A weaker-than-expected print could temporarily temper the rally, but strong results could propel the Nasdaq 100 to new highs. Watch for reactions around the 19,000 level as immediate support. A break above 19,100 would target further upside. The trade that’s working is still long tech on dips. The risk is a sharp reversal if the retail sales data disappoints and triggers a broader risk-off move. The pain trade is a continued grind higher, squeezing any remaining shorts and further extending the rally.

  • Dow Jones Set for Record Open – Thursday, 14 May

    Where we are: Dow futures are pointing to a positive open, trading around 50,150, fueled by strong tech earnings. This puts the index on track to surpass its all-time high. The overnight range has been relatively tight, consolidating gains from yesterday’s session. Currently, the Dow is well above yesterday’s NY close, signaling strong upward momentum.

    What’s driving it: The surge in Dow futures is primarily driven by the ongoing tech rally, spurred by impressive earnings from companies like Cisco, whose AI orders are boosting sentiment. The prospect of a Trump-Xi summit is also supporting risk appetite, with hopes for easing trade tensions. While energy prices remain elevated, the strong performance of tech stocks is overshadowing concerns about inflation and potential Fed hawkishness.

    • Cisco is up 15% premarket following strong earnings and forecasts.
    • Trump-Xi summit is supporting risk appetite.
    • Net non-commercial positioning in Dow Jones futures is modestly short (-677 contracts), indicating potential for a squeeze if the rally continues.

    NY session focus: Traders will be closely watching the 08:30 ET release of Core Retail Sales and Retail Sales data, as well as Unemployment Claims. Strong prints could reinforce hawkish Fed expectations, potentially tempering the rally, while weak data could fuel further upside. Key levels to watch are 50,200 as initial resistance and 50,000 as immediate support. The AI-driven tech trade is working, but vulnerable to a broader risk-off move if geopolitical tensions flare. The pain trade would be a significant upside surprise in retail sales leading to renewed hawkish Fed bets.

  • 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.

  • Dollar Holds Firm Ahead of PPI Data – Wednesday, 13 May

    Where we are: The Dollar Index is currently hovering around 118.10, consolidating after its recent push to one-week highs. The overnight range has been relatively tight, and the DXY is holding above its prior New York close, underpinned by expectations of sustained higher interest rates. Key technical levels to watch include resistance at 118.30 and support around 117.80.

    What’s driving it: The dominant driver remains the anticipation of stickier-than-expected US inflation, reinforced by yesterday’s hotter-than-expected PPI print. The market is laser-focused on whether this morning’s Core PPI data, due at 08:30 ET, will confirm this trend. This narrative has seen US 2Y yields climb to 3.95% and 10Y yields to 4.42%, further supporting the Greenback. Recent hawkish interpretations of the Fed’s data-dependent stance continue to bolster the USD, pricing out near-term rate cut bets.

    • The 2s10s spread remains at 0.46%, flattening slightly, signalling the market still expects eventual easing despite current hawkishness.
    • Rising 10Y real yields, currently at 1.95%, continue to present a headwind for gold, indirectly supporting the Dollar.
    • Speculator positioning remains crowded long in USD, at the 83rd percentile, increasing the risk of a squeeze on any dovish surprise.

    NY session focus: All eyes are on the 08:30 ET Core PPI print – a beat would likely fuel further USD strength, targeting 118.50, while a miss could trigger a sharp correction toward 117.50. Also of note is the Fed Chair Nomination Vote this afternoon at 14:30 ET. The consensus is for a smooth pass for Kevin Warsh, but any unexpected drama could introduce volatility. The trade that’s working is still fading dips in USD/JPY. The pain trade for the Dollar would be a sharp drop in core inflation, forcing a rapid repricing of Fed expectations.

  • S&P 500 Eyes PPI Data Amidst Fed Uncertainty – Wednesday, 13 May

    Where we are: S&P 500 futures are trading near flat this morning, hovering around 5230, as we await key US data. The overnight range has been relatively contained, with limited volatility seen in early European trading. This level sits just below the prior NY close, suggesting a cautious tone ahead of the data releases and the Fed Chair nomination vote.

    What’s driving it: The market is currently torn between inflationary pressures and the continued allure of the AI rally. The rise in both 2Y and 10Y Treasury yields, up 5bp and 4bp respectively, signals building concerns about inflation, reinforced by a 2bp rise in the 10Y real yield, creating a headwind for gold. All eyes will be on the 08:30 ET Core PPI and PPI prints, which are expected to show continued inflationary pressures. Adding to the uncertainty is the impending Fed Chair Nomination vote later today at 14:30 ET.

    • The 2s10s spread sits at 0.46%, indicating a modestly steepening yield curve.
    • VIX has crept up to 18.38, a 6.92% increase, reflecting some apprehension.
    • Speculators remain modestly short S&P 500 futures, yet the net short position is only at the 77th percentile, meaning a major squeeze is not the likeliest outcome.

    NY session focus: All eyes are on the 08:30 ET PPI releases, where a higher-than-expected print will likely trigger a risk-off move, pushing yields higher and potentially testing the 5200 support level on the S&P 500. A weaker print, however, could reignite the AI-led rally, targeting 5250 and potentially new all-time highs. Watch for any headlines surrounding the 14:30 ET Fed Chair nomination vote. The trade that’s working continues to be buying dips in AI-related stocks, but it’s a high-conviction, low-delta regime. The biggest risk is a hawkish surprise stemming from the PPI data, leading to a broader market correction and unwinding of leveraged long positions. The pain trade is a decisive break above 5250, leaving shorts scrambling to cover.

  • Nasdaq 100 Faces Inflation Headwinds Despite AI Optimism – Wednesday, 13 May

    Where we are: Nasdaq 100 futures are trading near flat this morning, hovering around 19,650 after a mixed overnight session. The index remains close to record highs, fueled by continued enthusiasm for AI-related stocks, but is finding resistance as inflationary pressures resurface. This level puts it just above yesterday’s NY close, with the overnight range relatively contained ahead of key US data.

    What’s driving it: The primary driver is renewed inflation concerns in the US, as evidenced by the uptick in producer prices. Rising US real yields are also acting as a headwind. While the AI rally, particularly related to Nvidia and its engagement in China, is providing support, the market is struggling to fully embrace risk given the broader macro picture. The 2s10s spread remains positive, although compressed slightly at 46bp, suggesting a degree of caution persists regarding the growth outlook despite the inflation signal.

    • US 10Y Real Yields are up 2bp d/d to 1.95%, increasing the opportunity cost of holding equities.
    • Net non-commercial positioning in Nasdaq 100 futures is modestly long, at the 2nd percentile, suggesting limited room for further speculative inflows and possible squeeze risk to the downside if sentiment shifts.
    • China AI stocks surged overnight following Nvidia CEO Huang’s visit, boosting Nvidia supply bets, but this tailwind may be limited given domestic inflation concerns.

    NY session focus: All eyes are on the 08:30 ET release of Core PPI and PPI data, which will likely dictate the near-term direction. A hotter-than-expected print could accelerate the sell-off. Support lies around 19,500, while resistance sits near the all-time highs around 19,700. Traders should monitor the reaction in US Treasury yields. We also have the Fed Chair Nomination Vote at 14:30 ET, but that’s widely expected to pass and shouldn’t be a major market mover. The trade that’s working is shorting the NDX on rallies above 19,700, while the trade at risk is chasing the AI narrative without acknowledging valuation risks. The pain trade here is PPI misses substantially to the downside, unleashing another big wave of AI-led euphoria.

  • Dow Faces Inflation Headwind on Warsh Nomination – Wednesday, 13 May

    Where we are: Dow futures are currently down roughly 250 points, trading near 39,250. Overnight, the index has largely traded sideways after yesterday’s late rally, but now trades closer to session lows following the CNBC wholesale inflation print. The DJIA closed yesterday near 39,500, and a breach of 39,200 would open the door to further downside.

    What’s driving it: Rising inflationary pressures, evidenced by the higher-than-expected PPI figures, are weighing on the Dow. The US 2Y yield continues to climb, now at 3.95%, reflecting a hawkish repricing in the front end of the curve. This comes as the market anticipates the Fed Chair nomination vote later today, with Kevin Warsh expected to pass, which could signal a shift towards a more hawkish monetary policy stance and further pressure risk assets.

    • Wholesale inflation jumped 6% in April on an annual basis.
    • The 2s10s spread remains inverted at -0.46%, signaling ongoing recession concerns.
    • Net non-commercial positioning is modestly short at -677 contracts, leaving room for further downside pressure as inflation fears grip the market.

    NY session focus: The key event today is the 08:30 ET PPI release and how the market interprets it. A strong print will likely exacerbate inflation fears and push the Dow lower, while a surprise to the downside may offer a brief respite. All eyes will then be on the Fed Chair Nomination Vote at 14:30 ET. A Warsh nomination will steepen the bear flattener and likely lead to further weakness in the Dow. The trade that’s working is shorting rallies, while the trade at risk is dip buying. The pain trade is a weaker-than-expected PPI print, which could trigger a short squeeze and send the Dow higher.

  • NY Session Tactical Brief – Tuesday, 12 May

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

    Today’s market themes:

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

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

    Watch list (native time per event):

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

    Bias by asset:

    STRICT SILO RULE: For every non-USD asset, the Domestic line MUST contain only domestic content (home central bank / domestic data / domestic yield / domestic political-fiscal driver). USD, DXY, Fed, US yields, and risk regime go in the Cross line — never in Domestic. If no fresh domestic catalyst exists, write “No fresh domestic catalyst — sensitive to US response” in Domestic. For commodities, Domestic = real-yields / supply / inventories / flows. For BTC, Domestic = funding / ETF flow / on-chain.

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

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

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

  • Dollar on Edge Ahead of CPI Data – Tuesday, 12 May

    Where we are: The Dollar Index (DXY) is currently hovering around 98.15, having traded in a tight overnight range of 98.00-98.25. This is slightly above Friday’s NY close. Key technical resistance lies at 98.50, with support around 97.80.

    What’s driving it: All eyes are on today’s US CPI release at 08:30 ET. The Fed’s patient hold hinges on continued disinflation, making this data pivotal. Forecasts suggest an uptick in CPI y/y to 3.7%, and a firm print would push back expectations of Fed cuts, supporting the dollar. The market is already positioned somewhat long USD, so a weak print carries squeeze risk. Recent Fed speak has been relatively quiet, though Governors Waller and Cook both spoke on Friday, but their comments were backward-looking. The recent rise in breakeven inflation, now at 2.47%, further underscores the sensitivity of the market to inflation data.

    • The market is net long USD, at the 83rd percentile (52w), increasing the probability of a squeeze if the data misses.
    • 10Y breakeven inflation rose 2bp on Monday to 2.47%, suggesting inflation expectations remain elevated.
    • The Warsh Fed Chair nomination cleared a Senate hurdle overnight, suggesting some continuity in monetary policy direction is likely, but the market’s focus is squarely on the CPI data this morning.

    NY session focus: The core event today is the 08:30 ET US CPI release. A higher-than-expected print will likely see the DXY test 98.50 resistance and potentially push towards 99.00, while a downside surprise could trigger a squeeze towards 97.50. The 11:59 ET Fed Chair Nomination Vote is largely priced in, but any unexpected issues could add volatility. The trade that’s working is fading USD rallies ahead of data releases. The at-risk trade is short USD into this CPI print. The pain trade is a substantial upside surprise on core CPI, forcing a rapid repricing of Fed expectations and a significant dollar short squeeze.

  • S&P 500 Braces for CPI After Yield Curve Bear Steepen – Tuesday, 12 May

    Where we are: S&P 500 futures are trading around 5185, coming off overnight lows near 5170. The index saw a mild pullback in early EU cash trading, mirroring pre-market weakness after the hot CPI print. The futures contract remains below Friday’s close, suggesting a continuation of last week’s choppy consolidation around the 5200 level.

    What’s driving it: The immediate driver is the hotter-than-expected CPI data, with the headline figure printing at 3.7% y/y versus the 3.3% expected and Core CPI at 0.3% m/m versus the 0.2% expected. This has solidified concerns about persistent inflation and the potential for the Fed to delay any rate cuts, evidenced by the 2s10s steepening to 0.47%. Although the 10Y yield has fallen 3bp since Friday, the market is focused on breakeven inflation rising 2bp, contributing to equity unease. This reinforces the expectation that the Fed will maintain its hawkish stance, further weighing on risk sentiment.

    • CPI y/y printed 3.7% vs 3.3% expected, triggering an initial risk-off reaction.
    • The 10Y Breakeven Inflation rate rose 2bp, suggesting inflation expectations are becoming unanchored.
    • Despite modestly short positioning in S&P 500 futures, there’s limited squeeze risk given the prevailing macro headwinds.

    NY session focus: All eyes will be on the market’s reaction to the 08:30 ET CPI report. Traders should watch for potential rotation into value names, particularly if energy prices continue to climb. A break below 5170 could open the door for a test of the 5150 level. The 11:59 ET Fed Chair Nomination Vote is a known positive, but unlikely to offset inflation concerns. The working trade is shorting rallies into the 5200 resistance; at risk is the long-duration tech trade given the repricing of rates. The pain trade here is a sudden dovish pivot from the Fed, which seems increasingly unlikely in the near term.

  • Nasdaq 100 Faces Inflation Test; Bulls Prepare to Defend – Tuesday, 12 May

    Where we are: Nasdaq 100 futures are currently trading around 19,850, retreating from overnight highs after the hotter-than-expected CPI print. The index is trading roughly 0.75% below yesterday’s New York close, with the overnight range spanning approximately 150 points. Initial support lies at 19,800, with further downside targeting 19,700.

    What’s driving it: Today’s hotter-than-expected CPI data is the dominant driver, reigniting fears of persistent inflation and diminishing the likelihood of further Fed rate cuts this year. The market is now repricing the probability of easing, putting upward pressure on real yields and weighing on risk assets. While the 10-year Treasury yield dipped slightly to 4.38% yesterday, real yields remain elevated at 1.93%, creating a headwind for tech stocks and other growth sectors. The prospect of a passed Fed Chair nomination vote later today is unlikely to offset the inflationary concerns.

    • Headline CPI y/y printed at 3.8% versus the 3.7% forecast, exceeding expectations and fueling inflation worries.
    • The 10-year breakeven inflation rate sits at 2.47%, reflecting the market’s perception of rising inflation expectations.
    • Speculator positioning in Nasdaq 100 futures is modestly long, but with only 0.4% of open interest, suggesting limited squeeze potential despite the recent pullback.

    NY session focus: The immediate focus is on digesting the 08:30 ET CPI release and assessing the market’s reaction. Keep an eye on the 10-year Treasury yield and real yield moves as key indicators. Watch for support around 19,700; a break below that level could trigger further selling. The trade that’s working is short NDX on rallies. The trade at risk is dip-buying until the inflation picture becomes clearer. The pain trade would be a surprisingly dovish pivot from the Fed, sparking a rapid rally in tech and growth stocks.

  • Dow Futures Pare Gains After Hot CPI Print – Tuesday, 12 May

    Where we are: Dow Jones futures are currently trading near the flatline, paring earlier gains in pre-market trading, around 39,450. The overnight range has been relatively contained as traders digested the higher-than-expected CPI figures released moments ago. This level sits slightly below yesterday’s New York close, suggesting a cautious open ahead.

    What’s driving it: The higher-than-forecast CPI print is the dominant driver this morning, casting a shadow over the market. Headline CPI y/y hit 3.8%, exceeding the expected 3.7%, reinforcing concerns that inflationary pressures are proving stickier than anticipated. This impacts the Dow directly by denting earnings prospective, especially for companies with lower pricing power, and indirectly through the anticipated reduction in Fed rate cut expectations. The US 10Y yield, despite yesterday’s decline, remains elevated at 4.38%, offering an alternative to equities.

    • Headline CPI y/y rose to 3.8%, above the 3.7% consensus.
    • The US 10Y Real Yield remains at 1.93%, limiting equity upside.
    • Net non-commercial positioning in Dow futures is modestly short at -677 contracts, suggesting limited immediate squeeze potential.

    NY session focus: All eyes will be on the market’s reaction to the 08:30 ET CPI release, with traders closely monitoring the Dow’s ability to hold above 39,400. Key levels to watch are 39,300 as immediate support and 39,550 as initial resistance. Given the hot CPI, the short Dow trade targeting 39,000 gains traction. The vote on the Fed Chair nomination at 11:59 ET will be a secondary focal point but is widely expected to pass. The pain trade would be a rapid reversal, fueled by a dovish interpretation of the Fed Chair vote outcome, pushing the Dow above 39,600.

  • NY Session Tactical Brief – Monday, 11 May

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

    Today’s market themes:

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

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

    Watch list (native time per event):

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

    Bias by asset:

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

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

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