Category: US

  • S&P 500 Sentiment Remains Fragile Despite Record Highs – Monday, 11 May

    Where we are: S&P 500 futures currently trade at 7408.75, up a mere 3.00 points, clinging to a fractional gain of 0.04%. The overnight range has been tight, between 7391.00 and 7420.25. Cash S&P closed unchanged on Friday at 7398.90, so we’re essentially treading water here pre-market.

    What’s driving it: Despite the S&P 500’s recent record-setting run, the underlying narrative remains shaky, with high energy prices and the sustainability of the AI rally weighing on sentiment. US 2-year and 10-year yields both rose by 5bp on Friday, with the 10-year real yield climbing 2bp to 1.96%, creating a headwind for gold and potentially equities. While equities have remained near record highs, fuelled by the recent earnings season, pre-market trading shows some weakness in AI hyperscalers and chip producers, who surged last week.

    • US 10-year real yields are up 2bp on Friday, applying pressure to risk assets.
    • Net non-commercial positioning in S&P 500 futures remains modestly short at -98,581 contracts, although it has increased by 1,941 contracts week-on-week.
    • WTI crude closed up 4.16% on Friday, adding to inflation concerns.

    NY session focus: Focus will be on whether the market can maintain its upward momentum in the face of rising yields and energy prices. Keep an eye on the AI names; any further weakness there could trigger a broader sell-off. Watch 7420.25 as intraday resistance. A break above that could see a test of higher levels, while failure to hold 7391.00 would open the door to a deeper correction. The pain trade here is a continued melt-up fueled by AI enthusiasm, leaving the shorts scrambling to cover.

  • Nasdaq 100 Tightrope Walk Continues – Monday, 11 May

    Where we are: Nasdaq futures are currently trading at 29271.00, down 0.12% on the day, trading within a relatively narrow range of 29227.50 to 29399.25. This is just shy of Friday’s cash close of 26247.08, highlighting the persistent premium in futures. Despite the minor pullback, the index remains near record highs reached last session, with bulls eyeing 30,000 if the AI rally resumes its earlier momentum.

    What’s driving it: A mixed picture is developing, with rising real yields acting as a headwind to tech valuations even as optimism around AI investment persists. US 10-year real yields have climbed to 1.96%, a 2bp rise on Friday. This increase, reflecting expectations of sustained economic growth and tighter monetary policy, puts pressure on high-growth tech stocks. The impact is somewhat offset by the continued focus on AI plays, as demonstrated by Pictet Fund’s allocation of 30% of its cash into AI stocks, and a solid tech earnings season, highlighted by Dan Ives predicting Nasdaq 30,000 as AI rally expands.

    • US 10Y real yields at 1.96% offer less support to high-multiple tech names
    • Pictet Fund’s 30% allocation to AI stocks signals continued conviction
    • Net non-commercial positioning remains modestly long, but only at the 2th percentile of the 52-week range, leaving room for more accumulation on dips.

    NY session focus: Traders will be closely watching the response to any further weakness in AI Hyperscalers and chip producers, after pre-market softness on Monday. Focus will remain on bond yields, especially real rates, to see if the current upward trend continues. A break below 29227.50 in the futures could trigger a test of lower levels. On the upside, a push above 29400 targets a run at 29500. The main event today will be navigating any risk-off headlines regarding energy price spikes or comments on the Iran situation. The pain trade remains a deeper correction in high-multiple tech, particularly if real yields continue to rise.

  • Dow Jones Calm Before the Storm – Monday, 11 May

    Where we are: Dow futures currently trade at 49650, up 34 points on the session, holding near the top of the day’s range (49471-49706). This is a slight positive from the cash close at 49609. The market is treading water as traders await the 08:30 ET data dump, showing little directional conviction after the recent rally to new highs.

    What’s driving it: The underlying US macro picture remains supportive, though perhaps increasingly priced in. The recent earnings-fueled rally has pushed equities to record highs, but there’s a lingering question of whether the AI boom can continue to propel the market higher. The 10Y Real Yield sitting at 1.96%, up 2bp on the week, acts as a headwind for gold and potentially for risk assets as well. Any significant upside surprise on inflation would likely translate to a further repricing of Fed expectations and thus further pressure on equities.

    • Speculator positioning in Dow Jones futures shows a net short of -677 contracts, a rise of 754 on the week. This modestly short stance suggests there’s still room for a squeeze higher if the data surprises to the upside.
    • WTI crude remains elevated at $109.76, which is +4.16% on the week, creating a difficult backdrop for disinflation trades and further complicating the Fed’s path.
    • The 2s10s spread sits at 0.48%, having flattened -1bp on the week, signalling some underlying concern about the growth outlook despite the equity rally.

    NY session focus: All eyes are on the 08:30 ET data releases. Strong figures could solidify expectations for continued Fed hawkishness, potentially triggering a correction. A weaker print would likely fuel further upside in the AI-led tech names, with traders eyeing the 50,000 level on the Dow. Key level to watch is the intraday high at 49706; a break above this could trigger further short covering. The trade that’s working is still long AI, but the trade that’s at risk is anything tied to traditional value or cyclical names. The pain trade is a significant rates sell-off combined with a weaker-than-expected economic print, creating a stagflationary environment that forces a broad-based risk unwind.

  • NY Session Tactical Brief – Friday, 8 May

    Regime: Risk-on, as equity futures surge on hopes of softer US payrolls and bond yields drift lower (US 10Y at 4.357%).

    Today’s market themes:

    • US Payrolls showdown: markets bracing for a potential dovish surprise amid a crowded USD long positioning.
    • Iran tensions: Oil prices remain volatile amid geopolitical instability and supply concerns.
    • Central Bank Divergence: Focus on Lagarde and Bailey speeches while watching BoJ comments regarding JPY.

    The setup: The market is pricing in a weaker-than-expected US jobs report, fueling a rally in risk assets. The crowded USD long position leaves room for a significant squeeze if the data disappoints. Watch US 10Y yield response to payrolls and the DXY level around 97.77.

    Watch list (native time per event):

    • 08:30 ET USD: Non-Farm Employment Change (forecast 65K, prior 178K)
    • 08:30 ET CAD: Employment Change (forecast 12.9K, prior 14.1K)
    • 13:20 London GBP: BOE Gov Bailey Speaks

    Bias by asset:

    • DXY:
      • Direction: Bearish.
      • Domestic (US): Fed policy outlook dependent on US data, especially labor market.
      • Cross: Risk sentiment dependent on USD strength, FX cross flows.
      • Levels: Support at 97.50, resistance at 98.20.
    • EUR/USD:
      • Direction: Bullish.
      • Domestic (EU): ECB’s rhetoric, core inflation and German Bund yields.
      • Cross: DXY weakness, US-DE 10Y spread favoring EUR, positive risk sentiment.
      • Levels: Support at 1.1700, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Bullish.
      • Domestic (UK): BoE policy guidance, Gilt yields, services CPI.
      • Cross: DXY weakness, US-UK 10Y spread, risk on sentiment.
      • Levels: Support at 1.3550, resistance at 1.3650.
    • USD/JPY:
      • Direction: Neutral.
      • Domestic (JP): BoJ policy, JGB yield curve control, intervention threat.
      • Cross: US 10Y yields, DXY direction, risk appetite.
      • Levels: Support at 156.00, resistance at 157.00.
    • USD/CAD (Loonie):
      • Direction: Neutral.
      • Domestic (CA): BoC policy, Employment change data and WTI correlation.
      • Cross: DXY direction, US-CA 10Y yield spread.
      • Levels: Support at 1.3600, resistance at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bullish.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, US-AU 10Y spread, China growth outlook.
      • Levels: Support at 0.7200, resistance at 0.7250.
    • NZD/USD (Kiwi):
      • Direction: Bullish.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, US-NZ 10Y spread, risk appetite.
      • Levels: Support at 0.5900, resistance at 0.5975.
    • USD/CHF (Swissy):
      • Direction: Bearish.
      • Domestic (CH): SNB stance and Swiss yield curve.
      • Cross: DXY weakness, safe-haven demand.
      • Levels: Support at 0.7750, resistance at 0.7810.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish.
      • Domestic: Relative CB policy, relative yield spreads drive direction.
      • Cross: DXY, risk regime, cross-of-crosses dynamics.
      • Levels: Watch key technical levels, sensitive to GBP and JPY crosses.
    • XAU (Gold):
      • Direction: Bullish.
      • Domestic (asset-specific): Real yields trending lower, rising breakevens, central bank demand.
      • Cross: DXY weakness, risk-off sentiment.
      • Levels: Support at 4700, resistance at 4750.
    • XAG (Silver):
      • Direction: Bullish.
      • Domestic (asset-specific): Industrial demand expectations, gold-silver ratio.
      • Cross: DXY weakness, risk appetite.
      • Levels: Support at 8100, resistance at 8200.
    • WTI / Brent:
      • Direction: Mixed.
      • Domestic (asset-specific): Iran tensions, EIA inventory data, OPEC output levels.
      • Cross: DXY, risk sentiment.
      • Levels: Watch inventory reports, supply disruptions.
    • Copper:
      • Direction: Bullish.
      • Domestic (asset-specific): Positive China growth outlook, LME stocks, supply issues.
      • Cross: DXY, global growth.
      • Levels: Support at 625, resistance at 635.
    • SPX:
      • Direction: Bullish.
      • Domestic (US): Earnings season, Fed policy outlook, US yield reaction.
      • Cross: VIX suppression, global sentiment.
      • Levels: Futures resistance at 7420, cash support 7330.
    • NDX:
      • Direction: Bullish.
      • Domestic (US): Mega-cap tech earnings, real yields and AI investments.
      • Cross: Rates sensitivity, low VIX environment.
      • Levels: Support at 28800, resistance at 29000.
    • US30 (Dow):
      • Direction: Bullish.
      • Domestic (US): Industrial earnings, cyclical sentiment.
      • Cross: Bond yields response.
      • Levels: Support at 49500, resistance at 50000.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk, and US macro performance.
      • Levels: Support at 22800, resistance at 22950.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): German Bund yields and broader Eurozone sentiment.
      • Cross: US Tech, DXY, risk appetite.
      • Levels: Support at 24400, resistance at 24550.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY strength sensitivity, JGB yields, BoJ policy.
      • Cross: US tech, global risk appetite.
      • Levels: Support at 62500, resistance at 62800.
    • BTC:
      • Direction: Neutral.
      • Domestic (asset-specific): ETF inflows, on-chain activity, funding rate.
      • Cross: DXY direction, risk sentiment, and Nasdaq correlation.
      • Levels: Support at $79,000, resistance at $80,500.

    Positioning watch: USD, AUD and BTC are crowded longs, S&P, Nasdaq, GBP, JPY and NZD are crowded shorts. A strong payrolls number will amplify the USD short squeeze while a weak number risks a violent short squeeze in GBP, JPY and Nasdaq.

    The pain trade: A strong US jobs report would trigger a massive USD rally, crush risk assets, and inflict maximum pain on the crowded short positions in GBP, JPY and tech stocks.

  • Dollar Under Pressure as Yields Dip on Iran Ceasefire – Friday, 8 May

    Where we are: The DXY currently trades at 97.77, down 0.35% on the day, having traded in a range of 97.75-98.17. The dollar is testing ten-week lows amidst a broad risk-on move. We see scope for further weakness if today’s US data misses, potentially targeting 97.50.

    What’s driving it: A tentative ceasefire with Iran is driving a risk-on bid across markets, easing concerns about energy supply disruptions through the Strait of Hormuz and weighing on the dollar. Domestically, the market is heavily focused on today’s 08:30 ET payrolls print. The Fed remains in a patient hold pattern, contingent on further disinflation in core services and cooling labour costs; this puts even greater weight on today’s employment data, especially Average Hourly Earnings.

    • The 10-year real yield (TIPS) has fallen to 1.94%, underpinning the bid in gold and reflecting expectations of future Fed easing.
    • Speculative positioning in the dollar remains crowded long (92nd percentile), creating squeeze risk if the data disappoints.
    • US 2Y and 10Y yields are both down around 2-3 bps pre-data, signalling a market pricing in a higher chance of weaker data.

    NY session focus: Today’s 08:30 ET employment data (Non-Farm Payrolls, Unemployment Rate, Average Hourly Earnings) will be the key driver of dollar direction. Beyond that, watch for the 10:00 ET Prelim UoM Consumer Sentiment and Inflation Expectations. A strong payrolls print could see the DXY quickly retest 98.00, while a miss could accelerate the move towards 97.50. President Trump’s 12:00 ET speech is a wildcard, but unlikely to override the data impact. The pain trade for the dollar is a surprisingly hawkish Fed pivot on the back of a robust jobs report.

  • S&P 500 Churns at All-Time Highs – Friday, 8 May

    Where we are: The S&P 500 futures are currently trading at 7405.75, up 0.92% on the day, pushing into fresh all-time highs with an intraday range of 7338.00-7412.00. This compares to a cash close yesterday of 7337.10, with futures holding gains through the European morning despite a mixed showing from cash indices.

    What’s driving it: The rally is fueled by a continued bid in risk assets, predicated on strong earnings from AI and cloud-related companies, with Akamai the latest to post impressive growth numbers in its cloud infrastructure business. The prospect of robust growth appears to be overshadowing concerns about persistent inflation and potential Fed tightening, although the tape is notably sensitive to the 08:30 ET labour-market data. Real yields are trending lower, underpinning gold and, by extension, the broader risk-on sentiment.

    • The 10-year breakeven inflation rate has edged up to 2.45%, potentially influencing the Fed’s thinking, and reinforcing the importance of today’s data.
    • The 2s10s spread remains inverted at 0.49%, a signal that some see as cautioning against an overly aggressive Fed, despite inflationary pressures.
    • Net non-commercial positioning in S&P 500 futures remains modestly short at -100,522 contracts, but has increased by 9,435 contracts week-on-week, suggesting short covering that could fuel further upside.

    NY session focus: All eyes are on the 08:30 ET release of Average Hourly Earnings and Non-Farm Employment Change, followed by the Unemployment Rate. Better-than-expected data, particularly on the wage front, would likely reinforce hawkish Fed rhetoric and could trigger a pullback in equities towards the 7350 level. Conversely, a soft print would likely send the S&P higher. Key levels to watch are 7420 as resistance, and 7380 as initial support. The current trade is long tech, but that is at risk if yields spike on strong data. The pain trade is a sustained break above 7420, forcing shorts to cover aggressively into the weekend.

  • Nasdaq Futures Surge on Tech Optimism – Friday, 8 May

    Where we are: Nasdaq futures are currently trading at 28950.25, up 1.38% and near the day’s high of 28975.25. This represents a substantial recovery from the cash market close of 25806.20 and suggests a strong open for the New York session. The overnight range has been relatively contained, indicating consolidated bullish sentiment ahead of key US data.

    What’s driving it: The primary driver is renewed optimism surrounding the tech sector, spurred by strong earnings prospects and the perception of value after a robust earnings season. This positive sentiment is amplified by lower US yields, with the 10-year yield at 4.357%, reflecting a slight easing of monetary policy concerns. Despite this, the 10-year breakeven inflation rate has edged up to 2.45%, suggesting that inflation expectations remain somewhat anchored.

    • CNBC World reported that analysts believe tech stocks offer their best value in years.
    • The US 10-year yield has dipped to 4.357%, down 3.0 bps on the day.
    • CFTC data reveals a crowded short positioning in Nasdaq 100 futures, with net non-commercial contracts at -2,322, near the 0th percentile, creating a potential squeeze risk.

    NY session focus: All eyes are on the 08:30 ET releases of Average Hourly Earnings and Non-Farm Employment Change, which will heavily influence market sentiment. A weaker-than-expected jobs report could further fuel the rally, while stronger data might temper gains. Key levels to watch are 29,000 as immediate resistance and 28,500 as support. The trade that’s working is long tech on the dip, but the trade at risk is shorting Nasdaq given the crowded positioning and potential for a squeeze. The pain trade would be a hawkish surprise, leading to a rapid reversal and short covering.

  • Dow Jones Futures Primed for Data-Driven Friday – Friday, 8 May

    Where we are: Dow futures currently trade at 49891, up 274 points or 0.55% on the session, having traded in a range of 49609 to 49955 overnight. Cash Dow closed yesterday at 49597, having traded a wide intraday range between 49488 and 50130. Futures are holding the overnight bid, suggesting dip-buyers are active and look to push above the psychological 50,000 level. We’re watching to see if this bid sustains into cash open.

    What’s driving it: The pre-market bid is being supported by the overnight risk-on tone, fueled by strong earnings prospects and a robust labor market. The rise in 10-year breakeven inflation to 2.45% suggests inflation concerns haven’t completely dissipated, potentially influencing the Fed’s future decisions, but doesn’t appear to be weighing on equities. For now, the market is looking through rising energy prices and focusing on corporate profitability, while betting that a Fed hike is not yet certain.

    • Strong S&P target from RBC on supportive economic backdrop.
    • 10Y real yields remain elevated at 1.94% offering a tailwind to gold.
    • Speculator positioning in the Dow Jones is modestly short, which is around the 56th percentile, reducing squeeze risk.

    NY session focus: All eyes will be on the 08:30 ET releases of Average Hourly Earnings, Non-Farm Employment Change, and the Unemployment Rate. A beat on payrolls, with a higher unemployment number could spook the market, while a miss on payrolls will likely support this rally higher. Keep an eye on 10:00 ET Prelim UoM Consumer Sentiment and Inflation Expectations. The trade that’s working is long tech given strong productivity and growing demand, while the trade at risk is short oil should the US-Iran ceasefire hold. The pain trade here is a surprisingly hawkish message from President Trump at 12:00 ET that spooks risk.

  • NY Session Tactical Brief – Thursday, 7 May

    Regime: Mixed, with VIX holding steady at 17.38 and US yields slightly lower, suggesting a cautious risk-on sentiment tempered by geopolitical tensions.

    Today’s market themes:

    • Mideast Peace Potential: Easing oil supply concerns dominate, pressuring crude and boosting risk assets.
    • Dollar Weakness: DXY continues its descent, supporting EUR, GBP, AUD, and gold.
    • Earnings Rotation: Focus shifts to industrial and financial earnings in the US after tech-led rally.

    The setup: Markets are pricing in a higher probability of a Middle East peace deal, driving WTI down nearly 6% to $90.21. This is providing a tailwind for risk assets, especially equities. However, crowded positioning in USD and Aussie could trigger a squeeze on any hawkish surprises. Watch US Unemployment Claims at 08:30 ET.

    Watch list (native time per event):

    • 08:30 ET USD: Unemployment Claims (forecast 205K, prior 189K)
    • 10:00 ET USD: Factory Orders (prior 0.8%)
    • 14:00 BST GBP: BoE’s Breeden speaks on Inflation

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): Fed likely to remain cautious; watch claims data.
      • Cross: Risk-on sentiment weighing; EUR and GBP strength.
      • Levels: Resistance at 97.90, support at 97.65.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, positive risk sentiment, US-DE 10Y widening.
      • Levels: Support at 1.1740, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, boosted by positive risk sentiment.
      • Levels: Support at 1.3590, resistance at 1.3650.
    • USD/JPY:
      • Direction: Neutral
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response.
      • Cross: US 10Y stable, risk-on environment, intervention risk high.
      • Levels: Support at 156.00, resistance at 156.50.
    • USD/CAD (Loonie):
      • Direction: Down
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: WTI weakness, DXY direction, US-CA 10Y spread.
      • Levels: Support at 1.3620, resistance at 1.3650.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, China growth optimism.
      • Levels: Support at 0.7230, resistance at 0.7270.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, positive risk sentiment.
      • Levels: Support at 0.5950, resistance at 0.5990.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, safe-haven outflows into risk-on.
      • Levels: Support at 0.7770, resistance at 0.7800.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY up, GBP/JPY up
      • Domestic: Relative hawkishness of BoE priced in; BoJ dovish.
      • Cross: Risk-on favoring JPY crosses; DXY impact on EUR/GBP.
      • Levels: Monitor ranges, relative yield direction key.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Rising as breakevens rise; CB demand supportive.
      • Cross: DXY weakness, safe haven demand diminishing.
      • Levels: Support at 4700, resistance at 4765.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand supportive.
      • Cross: DXY weakness, positive risk sentiment.
      • Levels: Support at 8000, resistance at 8250.
    • WTI / Brent:
      • Direction: Down
      • Domestic (asset-specific): Peace deal/higher supply.
      • Cross: DXY strength would add to move lower; risk aversion would add to move lower.
      • Levels: Support at 90.00, resistance at 96.00.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China rebound expectations/LME-stock
      • Cross: Global growth proxy; Dollar strength a headwind
      • Levels: Support at 615, resistance at 625
    • SPX:
      • Direction: Up
      • Domestic (US): Earnings momentum; rates stabilize.
      • Cross: Positive global tone, VIX suppression.
      • Levels: Futures support at 7380, resistance at 7410, cash support 7300.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap tech earnings supportive/ AI narrative.
      • Cross: Lower rates sensitivity, high beta.
      • Levels: Resistance at 28800, support 28600.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Rebound in industrial earnings; cyclical shift.
      • Cross: Responding positively to bond-yield relief.
      • Levels: Resistance near 50200, support at 49900.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk, benefiting from oil decline.
      • Levels: Support at 22800, resistance at 23000.
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields stable; weak economic data.
      • Cross: Watching US tech strength; risk-on sentiment.
      • Levels: Support at 24850, resistance at 25000.
    • Nikkei:
      • Direction: Up
      • Domestic (JP): JPY weakness driving earnings.
      • Cross: Catching up with US tech performance; risk-on buying.
      • Levels: Support at 62000, resistance at 63000.
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flow-dependent, funding elevated.
      • Cross: risk-regime, positive overall, high correlation to tech.
      • Levels: Support at 80500, resistance at 81700.

    Positioning watch: CFTC data shows crowded longs in AUD, Copper, and Bitcoin (>90th percentile) and crowded shorts in JPY, GBP, and Nasdaq (

    The pain trade: A hawkish surprise from the US Unemployment Claims, triggering a USD rally and sending risk assets lower, would hurt the most positions.

  • DXY Under Pressure as Geopolitical Risk Premiums Unwind – Thursday, 7 May

    Where we are: The DXY currently sits at 97.69, down 0.22% on the session, trading near the low end of its intraday range of 97.68-97.93. Yesterday’s close in New York was closer to 97.90, so we’re starting the NY day on the back foot. The dollar is catching a bid from a slightly weaker open in risk assets, attempting to find support around the 97.65 level.

    What’s driving it: The primary driver for the dollar’s weakness remains the easing of geopolitical tensions surrounding the Middle East, specifically the increased probability of a US-Iran agreement. This risk-on sentiment is weighing on safe-haven demand for the greenback. Even with this backdrop, the Fed remains in a patient hold, awaiting further evidence of disinflation in core services and labour-cost moderation before considering rate cuts. The market is pricing in increased chances of rate cuts, though, which is pressuring the dollar. The 10-year breakeven inflation rate declining 5bps yesterday hints at cooling inflation expectations.

    • The US 2-year yield is down 4bps today to 3.834%, reflecting expectations of near-term rate cuts.
    • 10Y real yields (TIPS) rising 1bp to 1.96% present a headwind for gold.
    • Speculator positioning is crowded long, with net non-commercial contracts at +4,508. At the 92nd percentile, the DXY is ripe for a squeeze on any further dovish surprises.

    NY session focus: All eyes will be on the 08:30 ET Unemployment Claims release, with the forecast at 205K versus the previous 189K. A higher-than-expected print could provide a temporary boost to the dollar. Key levels to watch are 97.50 on the downside and 98.00 on the upside. The short USD/JPY trade remains compelling, while long USD/CAD is vulnerable. The pain trade remains a re-escalation of Middle East tensions, reigniting the dollar’s safe-haven appeal.

  • S&P 500 Futures Eye Fresh Records as Yields Calm – Thursday, 7 May

    Where we are: S&P 500 futures are trading at 7402.00, up 0.30% and pushing against the intraday high of 7410.00. This comes after a solid rally in cash yesterday, which saw the S&P close at 7365.10, gaining nearly 1%. The overnight range has been relatively tight, suggesting consolidation before the US open. We’re poised to test new record highs, building on the momentum from the previous sessions.

    What’s driving it: The prevailing narrative is one of continued risk appetite underpinned by a dovish read on the Fed, even without any fresh catalysts today. The pullback in US Treasury yields, particularly the 2-year falling 4bp to 3.834%, is easing concerns about imminent rate hikes and supporting equity valuations. While the 10-year real yield (TIPS) is ticking higher, its impact is currently being offset by a broader risk-on sentiment. A weaker dollar, with the DXY down 0.22% to 97.69, is adding fuel to the fire.

    • Net non-commercial positioning in S&P 500 futures is modestly short at -100,522 contracts, which, at the 75th percentile, suggests some squeeze potential if the rally extends.
    • The 10Y breakeven inflation rate is down 5bp d/d, signalling that the market may be starting to price a disinflationary trend.
    • WTI crude oil remains elevated, trading above $109, but the broader market appears to be shrugging off inflationary concerns, focusing instead on growth prospects.

    NY session focus: All eyes will be on the 08:30 ET Unemployment Claims data release. A higher-than-forecast print (above 205K) could inject some volatility and potentially trigger a risk-off move. Key levels to watch are 7410.00 on the upside and 7377.25 as initial support. The trade that’s working is long S&P 500 on dips, while short positions are at risk if the market breaks decisively above the 7410 level. The pain trade would be a sharp reversal driven by a surprise hawkish shift in Fed rhetoric or a significant deterioration in the geopolitical landscape.

  • Nasdaq 100 Futures Rally to New Highs – Thursday, 7 May

    Where we are: Nasdaq futures are currently trading at 28755.25, up 0.33% on the day and near the session high of 28813.75. The overnight range has been relatively contained, but the move higher extends yesterday’s gains. Cash NDX closed last night at 25838.94, so futures are implying a significantly higher open today.

    What’s driving it: Risk sentiment remains broadly positive, fueled by expectations of a resolution to the Iran-US conflict and a potential boost to energy supplies, easing inflationary pressures. The US 10-year yield is down 2.8bps to 4.316%, while the 2-year yield is down a more substantial 4bps to 3.834%, suggesting a flattening of the curve, which is typically supportive for risk assets. However, rising real yields, now at 1.96%, present a potential headwind to gold and, by extension, a subtle caution flag for the broader risk rally.

    • Unemployment Claims data at 08:30 ET is the key domestic event today. The forecast of 205K vs. the previous 189K could temper the rally if it comes in higher than expected.
    • Speculator positioning in the Nasdaq 100 is heavily short, with net non-commercial positions at -2,322 contracts, putting it in the 0th percentile over the last 52 weeks. This creates a considerable short-squeeze risk if the rally persists.
    • The DAX is flat in European trading, while the FTSE is up 0.61%, pointing to a somewhat mixed picture outside of the US, suggesting this rally is quite domestic-centric.

    NY session focus: All eyes are on the 08:30 ET Unemployment Claims data – a weaker print could trigger a substantial short squeeze in Nasdaq futures, potentially pushing through resistance at 28850 and targeting 29000. Conversely, a strong print could lead to a retest of the 28600 level. Keep an eye on the DXY, currently at 97.69, for further weakness as it can act as an accelerant. The trade to watch remains dip-buying in tech, but a hawkish surprise from Claims data could quickly unwind this, especially given the crowded short positioning. The pain trade would be a surprisingly strong jobs number that forces the market to reprice Fed rate hike expectations.

  • Dow Jones Poised to Breach 50,250 on Bullish Sentiment – Thursday, 7 May

    Where we are: Dow futures currently trade at 50159, up 0.21% on the day, having established a range between 49984 and 50216. The Dow Jones cash index closed yesterday at 49911. With futures pointing higher, the index is poised to test the 50,250 level during the New York session, potentially pushing toward new all-time highs.

    What’s driving it: US yields are pulling back, with the 10-year currently at 4.316%, down 2.8 basis points. This easing in yields, coupled with a VIX at 17.38 reflecting suppressed volatility, is supporting the equity rally. While the 10Y real yield has ticked up slightly to 1.96%, the pullback in nominals is having more sway. There’s no obvious Fed catalyst today, meaning this is mostly flow and momentum after strong earnings broadly.

    • The 2-year yield is down 4 basis points to 3.834%, further steepening the 2s10s curve, which now sits at 0.49%.
    • The Citi news – shares down 3% pre-market after modest profit targets – might clip the wings of the rally, but broader sentiment is strong.
    • Speculator positioning in the Dow Jones is modestly short, at -1,431 contracts, which is only at the 56th percentile. This is not extreme enough to present any major squeeze risk.

    NY session focus: Keep an eye on the 08:30 ET Unemployment Claims data; a miss to the upside (higher claims) could trigger a further rally in bonds and stocks. The key level to watch is 50,250; a break above confirms the bullish trend. The trade that’s working is buying dips in mega-cap tech, riding the earnings wave. The trade at risk is shorting the Dow on valuation concerns – momentum is too strong right now. The pain trade is a sharp reversal in risk sentiment, triggered by a hawkish surprise from the Fed speakers next week.

  • NY Session Tactical Brief – Wednesday, 6 May

    Regime: Risk-on, fuelled by falling US yields and hopes of de-escalation in the Middle East; VIX is elevated but failing to hold gains.

    Today’s market themes:

    • Geopolitical relief rally: Equities and gold gain on reports of a potential US-Iran deal, sending oil sharply lower.
    • Dovish ECB spillovers: European yields are sharply lower after ECB commentary and stable wage data, supporting European equities.
    • Crowded short squeeze: Risk assets supported by potential short squeeze with CFTC data showing traders are heavily short JPY and Nasdaq.

    The setup: Oil’s sharp decline is the key driver today, prompting a rotation into risk assets, and supporting gold. The trade is to fade the rally in gold as real yields remain positive. Key risk is a breakdown in the US-Iran deal, which would send oil prices sharply higher again and reverse the risk-on tone.

    Watch list (native time per event):

    • 08:15 ET USD: ADP Non-Farm Employment Change (118K vs 62K)
    • 10:00 ET CAD: Ivey PMI (49.9 vs 49.7)
    • 16:15 ET CAD: BOC Gov Macklem Speaks

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): US data will be crucial in determining the next direction.
      • Cross: Risk sentiment and falling US yields are weighing.
      • Levels: Support at 97.50, resistance at 98.00.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): Lower Bund yields are supporting as ECB turns dovish.
      • Cross: Weaker DXY and positive risk sentiment are supportive.
      • Levels: Support at 1.1700, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness and risk appetite are key drivers.
      • Levels: Support at 1.3550, resistance at 1.3650.
    • USD/JPY:
      • Direction: Down
      • Domestic (JP): Intervention risk remains, limiting JPY weakness.
      • Cross: Falling US 10Y yields and a weaker DXY are pressuring.
      • Levels: Support at 155.00, resistance at 157.00.
    • USD/CAD (Loonie):
      • Direction: Neutral
      • Domestic (CA): BoC speakers watch to see if rate cuts are coming.
      • Cross: USD weakness offset by lower WTI, US-CA 10Y stable.
      • Levels: Support at 1.3580, resistance at 1.3650.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: Copper price rise and DXY weakness, China growth hopes aiding.
      • Levels: Support at 0.7200, resistance at 0.7280.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): RBNZ speakers in focus, impact on kiwi to be assessed.
      • Cross: DXY weakness and risk-on, limited by US yield impact.
      • Levels: Support at 0.5900, resistance at 0.6000.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness and haven demand waning.
      • Levels: Support at 0.7770, resistance at 0.7830.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed
      • Domestic: Relative CB divergence is a driver today.
      • Cross: EUR/GBP ranges. JPY shorts are exposed.
      • Levels: Monitor key levels from overnight session.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Hopes for de-escalation are driving.
      • Cross: Weaker DXY, fading risk-off, positive momentum.
      • Levels: Support at 4650, resistance at 4700.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): No fresh domestic catalyst — sensitive to US response.
      • Cross: Follows Gold’s trend, industrial demand boost.
      • Levels: Support at 7600, resistance at 7800.
    • WTI / Brent:
      • Direction: Down
      • Domestic (asset-specific): Deal chatter is main driver.
      • Cross: Weaker DXY isn’t sufficient to lift with Iran headlines.
      • Levels: Support at 90, resistance at 100.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): No fresh domestic catalyst — sensitive to US response.
      • Cross: Aided by optimism.
      • Levels: Support at 610, resistance at 620.
    • SPX:
      • Direction: Up
      • Domestic (US): Boosted sentiment supports outlook.
      • Cross: VIX regime shift, global risk-on fueling.
      • Levels: Futures 7300, cash support at 7250, resistance at 7350.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap resilience and lower rates helpful.
      • Cross: Rate sensitivity supporting.
      • Levels: Monitor intraday resistance and support levels.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Broader market lift aids cyclicals.
      • Cross: Lower yields benefit outlook.
      • Levels: Monitor intraday resistance and support levels.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Riding the positive global wave, GBP drag offset.
      • Levels: Monitor intraday resistance and support levels.
    • DAX:
      • Direction: Up
      • Domestic (DE): Lower Bund yields, EU tone aiding DAX.
      • Cross: Taking cues from US tech.
      • Levels: Monitor intraday resistance and support levels.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY weakness and earnings are important.
      • Cross: Risk tone and US tech performance play a key role.
      • Levels: Monitor intraday resistance and support levels.
    • BTC:
      • Direction: Up
      • Domestic (asset-specific): ETF flow stable, and funding rate stable.
      • Cross: Risk sentiment.
      • Levels: Support at 81000, resistance at 83000.

    Positioning watch: JPY is the most crowded short (0th percentile) and Aussie is most crowded long (96th percentile), per CFTC. A dovish surprise from the Fed or a hawkish BoJ shift could trigger a significant squeeze in JPY.

    The pain trade: A surprisingly strong ADP print would reignite inflation concerns and send yields higher, triggering a sharp reversal of today’s risk-on move and hurting gold longs.

  • DXY Plunges on Iran Deal Hopes, Intervention Chatter – Wednesday, 6 May

    Where we are: The DXY is currently trading at 97.79, down 0.41% on the day, having traded in a range of 97.48 to 98.22 so far. This represents a significant break below the 98.00 level, and extends the decline from yesterday’s close as risk sentiment improves. The Greenback is testing fresh intraday lows as traders price in a potential shift in geopolitical dynamics.

    What’s driving it: The primary driver behind the Dollar’s weakness appears to be growing optimism regarding a potential US-Iran deal and reduced Middle East tensions. This has spurred a drop in oil prices and, consequently, eased inflation concerns that were previously supporting the Greenback. The Fed remains in a patient hold, conditional on continued disinflation; the next meeting is tomorrow. Data dependency keeps the door open, but requires data that does not seem imminent.

    • The 10Y Breakeven Inflation rate fell 3bp yesterday, suggesting easing price pressures.
    • Speculator positioning in the Dollar remains crowded long at the 92nd percentile, heightening the risk of a squeeze on any further negative news or data disappointments.
    • Renewed speculation of possible intervention by Japanese authorities is contributing to Yen strength, indirectly weighing on the DXY.

    NY session focus: All eyes will be on the 08:15 ET release of the ADP Non-Farm Employment Change. A print significantly above the 118K forecast could provide a temporary bounce for the Dollar, while a miss would likely exacerbate the current downtrend. Key levels to watch are 97.50 as initial support and 98.25 as resistance on any retracement. The trade that’s working right now is short USD vs. high-beta currencies, while long USD positions are clearly at risk. The pain trade would be a hawkish surprise from tomorrow’s FOMC meeting pressuring the committee for further hawkish action.