Category: US

  • S&P 500 Pauses Near Record Highs – Tuesday, 2 June

    Where we are: S&P 500 futures are currently trading at 7600.50, down 0.14% on the session, after a tight overnight range of 7576.50 to 7611.00. This compares to the cash close at 7600.00 yesterday, leaving the index near all-time highs despite some profit-taking in pre-market trading. A retest of the overnight low would challenge recent bullish momentum.

    What’s driving it: A degree of consolidation seems to be prevailing after a strong rally. We are seeing a slight pullback in US yields, with the 10-year at 4.432% and the 2-year at 4.031%, suggesting some easing of rate-hike expectations, even as the Fed remains on hold. The DXY is relatively stable at 99.05, reflecting limited directional impetus at present. The risk tone is slightly cautious due to Middle East tensions, with geopolitical headlines overshadowing some positive earnings news.

    • Speculator positioning remains moderately short the S&P 500, suggesting the possibility of a squeeze if the index continues its upward trajectory.
    • HPE’s surge on an AI-fueled guidance upgrade highlights continued investor appetite for tech stocks with strong growth prospects.
    • The JOLTS job openings data at 10:00 ET may provide some clues on the strength of the labor market, though the forecast is unchanged from the previous reading.

    NY session focus: Traders will be watching the 10:00 ET JOLTS number for any indication of labor market cooling. Key levels to watch are 7575 as immediate support, and 7620 as resistance. The trade that’s working continues to be long tech on the AI narrative; the risk is any further escalation of US-Iran tensions impacting energy supply. The pain trade is a continued grind higher, forcing shorts to cover into record highs.

  • Nasdaq 100 Vulnerable as Positioning Nears Crowded Levels – Tuesday, 2 June

    Where we are: Nasdaq 100 futures are currently trading at 30551.75, up a meager 0.03% on the day, holding the overnight bid. The overnight range has been tight, between 30318.50 and 30584.75, capping out yesterday’s cash high, which peaked at 27190.21. Given the narrow range and proximity to the overnight high, a break above 30585 would signal a potential test of higher levels.

    What’s driving it: A mild risk-off tone is percolating through US futures ahead of the New York open, driven by lingering geopolitical tensions and some skepticism around AI spending. US yields are slightly lower, with the 10-year at 4.432% and the 2-year at 4.031%, reflecting a flight to safety but DXY is also softer, indicating a mixed sentiment. Recent wire news indicates that bullish positioning in US tech stocks, including those heavily weighted in the Nasdaq 100, is at risk of correction according to Citi analysts.

    • The JOLTS Job Openings report at 10:00 ET is the main macro focus today; a miss could exacerbate tech selling.
    • Convertible bond issuance is surging as investors embrace zero-interest debt for options on high-growth tech stocks, signaling froth in the market.
    • Speculator positioning in Nasdaq 100 futures is crowded short at the 2th percentile, suggesting a potential squeeze risk on any positive surprises.

    NY session focus: The JOLTS number at 10:00 ET will be closely watched for signs of labor market weakness. A break below 30300 in Nasdaq futures would suggest further downside, potentially targeting 30000. Conversely, a strong push above 30600 could trigger a short squeeze, given the crowded short positioning. The trade that is working is fading the rallies, but the risk is a squeeze rips the bears out before the data even hits. The pain trade for Nasdaq 100 is a strong JOLTS beat, coupled with a de-escalation of geopolitical risks, triggering a massive short squeeze and a retest of recent highs.

  • Dow Jones Bulls Face Resistance After Strong Run – Tuesday, 2 June

    Where we are: Dow futures are currently trading at 50893, down 179 points or 0.35% on the day. The overnight range has been relatively contained between 50871 and 51083. This puts the Dow futures below yesterday’s cash close of 51079, suggesting a slightly weaker open for the New York session. The cash index is trading above the intra-day low of 50767, suggesting this may be initial support.

    What’s driving it: The Dow is seeing some pullback following a strong run, with profit-taking likely in play ahead of potentially volatile economic data. We see a risk of downside surprise in this morning’s JOLTS data and think this may cause a risk-off move. Despite generally positive sentiment in Asia, where the Nikkei gained 0.16%, the mixed picture in Europe is a negative sign. A moderately short speculator positioning for the Dow, -9,324 contracts net, presents a squeeze risk if the market turns higher, but that feels remote right now.

    • US 10Y yields are slightly lower at 4.432%, indicating some risk aversion.
    • The DXY is also slightly lower at 99.05, providing limited support to the index.
    • Nvidia’s move into the PC chip market is weighing on sentiment in other tech stocks like AMD and Intel, even as the Nasdaq remains buoyant.

    NY session focus: Keep an eye on the 10:00 ET release of the JOLTS Job Openings figure, as a deviation from the forecast of 6.87M could trigger a significant market reaction. We are watching the 50767 cash level as a key support — a break below that could open the door for further downside towards 50500. The trade that has been working recently is long tech, but that feels stretched and vulnerable, especially if broader sentiment sours. The pain trade for the Dow would be a strong upside surprise in JOLTS, triggering a short squeeze that sends the index back above 51,000 quickly.

  • Dow Momentum Continues as Tech Sector Drives Gains – Monday, 1 June

    Where we are: The Dow Jones cash index is currently trading at 51033, up 259 points on the day. Futures are a touch firmer at 51246, up 197 points, having traded in a range between 50999 and 51382. The index is building on Friday’s gains and continues to push higher, buoyed by strong tech sentiment.

    What’s driving it: The primary driver remains strength in the tech sector. Nvidia’s announcement of its new RTX Spark Superchip has injected further momentum into the market. Rising US yields are also supporting gains, though modestly, with the 10-year at 4.450%.

    • Powell’s acceptance speech at the John F. Kennedy Library Foundation earlier provided a backdrop of steady confidence regarding future economic resilience.
    • Net non-commercial positioning in Dow futures is moderately short, at -9,324 contracts.
    • The VIX remains subdued at 15.74, indicating continued risk-on sentiment.

    NY session focus: All eyes will be on the 10:00 ET release of the ISM Manufacturing PMI, forecast at 53.3, and ISM Manufacturing Prices, forecast at 85.3. Watch for a break above the intraday high of 51382 in the Dow futures to confirm bullish momentum. A failure to sustain gains above 51000 could signal a near-term pullback. Later, at 20:30 ET, traders will digest any market-relevant comments from FOMC Member Powell. The trade that’s working is buying the dip on tech names. The trade at risk is shorting tech into continued positive news flow. The pain trade is a sharp reversal driven by hotter-than-expected inflation figures in the ISM Manufacturing Prices.

  • NY Session Tactical Brief – Monday, 1 June

    Regime: Risk-on, supported by easing global inflation expectations as indicated by lower US 10Y yields and firm equities futures.

    Today’s market themes:

    • ISM Day: US ISM Manufacturing PMI key for near-term Fed rate path signals.
    • USD strength: DXY gains traction amid mixed global growth outlook, impacting emerging market stocks.
    • Oil price volatility: Geopolitical tensions and supply concerns continue to underpin oil prices.

    The setup: ISM Manufacturing PMI at 10:00 ET will be crucial in determining the near-term Fed outlook. A print above 53.3 could fuel further DXY gains and pressure risk assets, while a miss could see yields dip and equity futures rally. Watch US 10Y around 4.45%.

    Watch list (native time per event):

    • 10:00 ET USD: ISM Manufacturing PMI (forecast 53.3, prior 52.7)
    • 10:00 ET USD: ISM Manufacturing Prices (forecast 85.3, prior 84.6)
    • 20:30 ET USD: FOMC Member Powell Speaks

    Bias by asset:

    • DXY:
      • Direction: Higher.
      • Domestic (US): ISM data crucial; Fed rhetoric leaning hawkish.
      • Cross: Risk-off flows supportive; EUR/GBP weakness adds to momentum.
      • Levels: Resistance 99.20, Support 98.80.
    • EUR/USD:
      • Direction: Lower.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength weighs; US-DE 10Y widening pressures.
      • Levels: Resistance 1.1670, Support 1.1630.
    • GBP/USD (Cable):
      • Direction: Neutral to slightly lower.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength a headwind; US-UK 10Y supportive.
      • Levels: Resistance 1.3480, Support 1.3440.
    • USD/JPY:
      • Direction: Higher.
      • Domestic (JP): BoJ still slow to tighten; intervention risks persist.
      • Cross: US 10Y driving force; DXY strength adds to upward pressure.
      • Levels: Resistance 159.75, Support 159.20.
    • USD/CAD (Loonie):
      • Direction: Higher.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength dominating; US-CA 10Y favors USD upside.
      • Levels: Resistance 1.3850, Support 1.3790.
    • AUD/USD (Aussie):
      • Direction: Lower.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; China growth concerns remain.
      • Levels: Resistance 0.7190, Support 0.7150.
    • NZD/USD (Kiwi):
      • Direction: Lower.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; risk-off sentiment hurting commodity currencies.
      • Levels: Resistance 0.5990, Support 0.5940.
    • USD/CHF (Swissy):
      • Direction: Higher.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; safe-haven demand muted.
      • Levels: Resistance 0.7870, Support 0.7820.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed, relative CB stance drives direction.
      • Domestic: ECB vs BoE/BoJ expectations key for cross-pair movements.
      • Cross: Overall DXY strength; risk impacting JPY leg most.
      • Levels: Monitor key levels on a case-by-case basis.
    • XAU (Gold):
      • Direction: Lower.
      • Domestic (asset-specific): Real yields rising limits upside.
      • Cross: DXY strength a major headwind.
      • Levels: Resistance 4580, Support 4520.
    • XAG (Silver):
      • Direction: Mixed.
      • Domestic (asset-specific): Industrial demand supportive, but volatile.
      • Cross: DXY strength weighs; risk appetite fluctuates.
      • Levels: Resistance 7660, Support 7420.
    • WTI / Brent:
      • Direction: Higher.
      • Domestic (asset-specific): Geopolitical tensions support; supply concerns.
      • Cross: DXY strength can limit some upside.
      • Levels: WTI Resistance 91.50, Support 88.50.
    • Copper:
      • Direction: Higher.
      • Domestic (asset-specific): China demand concerns still linger despite recent gains.
      • Cross: Dollar strength may temper upside for now.
      • Levels: Resistance 660, Support 640.
    • SPX:
      • Direction: Sideways to slightly higher.
      • Domestic (US): Data-dependent Fed outlook influences direction.
      • Cross: Risk sentiment driving force; watch VIX reaction.
      • Levels: Futures resistance 7630, cash support 7570.
    • NDX:
      • Direction: Sideways.
      • Domestic (US): Earnings season winding down, focus on macro.
      • Cross: Higher rates sensitivity; VIX affecting valuations.
      • Levels: Resistance 30600, Support 30350.
    • US30 (Dow):
      • Direction: Sideways to slightly higher.
      • Domestic (US): Cyclical sectors showing resilience.
      • Cross: Bond yield direction drives sentiment.
      • Levels: Resistance 51400, Support 50700.
    • UK100 (FTSE):
      • Direction: Lower.
      • Domestic (UK): Sterling weakness supportive, but overall global risk weighs.
      • Cross: Heavily affected by general mood across US/global markets.
      • Levels: Resistance 23450, Support 23300.
    • DAX:
      • Direction: Sideways.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech sector; DXY driving some investor sentiment.
      • Levels: Resistance 25350, Support 25100.
    • Nikkei:
      • Direction: Sideways to slightly higher.
      • Domestic (JP): Consolidation around record highs.
      • Cross: US tech; overall risk appetite important for sentiment.
      • Levels: Resistance 67300, Support 66200.
    • BTC:
      • Direction: Sideways to slightly lower.
      • Domestic (asset-specific): ETF flows influence price.
      • Cross: Heavily linked to DXY; sensitive to tech direction.
      • Levels: Resistance 74100, Support 71800.

    Positioning watch: USD is crowded long at 81st percentile, and JPY remains crowded short (0th percentile) presenting squeeze risks on any dovish pivot from the Fed or a BoJ hawkish surprise. Copper and BTC are crowded long as well, both at 94th, suggesting downside risks on weaker data.

    The pain trade: A weaker-than-expected ISM, combined with Powell hinting at openness to rate cuts, would trigger a sharp rally in bonds and equities, squeezing USD longs and JPY shorts simultaneously.

  • Dollar Grinds Higher, Fed Patience Remains Paramount – Monday, 1 June

    Where we are: The DXY is currently trading at 99.06, up 0.13% on the day, having carved out a 98.89-99.06 range so far. This pushes it above Friday’s close, driven by a moderate bid as EU cash markets progress. Focus remains squarely on the US data flow and whether it will prompt a rethink on the Fed’s timeline.

    What’s driving it: The Fed’s patient hold remains the primary driver, with any sustained dollar strength conditional on continued disinflation and a cooling labor market. Firm payrolls or a re-acceleration in services inflation would likely push back expectations of rate cuts, fueling further USD upside. The market is also mindful of the possibility of a Fed rate hike before year-end, especially if inflation remains sticky.

    • Powell’s remarks, warning against politicizing the Fed, underscore the central bank’s commitment to its data-dependent approach.
    • The 2s10s spread sits at 0.47%, a modest steepening of 1.0bp, suggesting a slight easing of recession fears but not enough to meaningfully alter the Fed’s calculus.
    • CFTC data show speculators are holding a crowded net long USD position, at the 81st percentile, indicating squeeze risk on any dovish surprise.

    NY session focus: The ISM Manufacturing PMI and ISM Manufacturing Prices, both released at 10:00 ET, will be closely watched for signals on inflation and economic activity. US 10Y yields, currently at 4.452%, will likely dictate the pace of any dollar move. If the data beat expectations, look for a push towards 99.25 in the DXY. At 20:30 ET, FOMC Member Powell speaks, providing a further opportunity for market participants to gauge the Fed’s thinking. The pain trade here is a soft ISM print that triggers a short squeeze in crowded USD longs.

  • S&P 500 Breaks to New Highs on Tech Strength – Monday, 1 June

    Where we are: The S&P 500 futures are currently trading at 7610.00, up 17.25 points, marking a 0.23% gain. The overnight range has been 7585.50-7622.00, with the index currently testing the upper end. Cash S&P sits at 7580.10. This price action extends the rally from Friday, fueled by ongoing strength in the tech sector.

    What’s driving it: The primary driver is renewed optimism in the US tech sector, spurred by positive earnings news and advancements in AI adoption. A moderately short positioning in the S&P 500 (-159,316 contracts) may be exacerbating the move higher. DXY strength to 99.06 is failing to cap the move, while the 10Y yield is little changed at 4.452%.

    • Nvidia’s announcement of its RTX Spark Superchip is driving significant momentum in software and hyperscaler stocks, with Microsoft and Oracle seeing notable gains.
    • A new study highlights Nvidia, Meta, and Schlumberger as leaders in AI adoption among S&P 500 companies, further boosting investor confidence in the sector.
    • The 2s10s spread has widened slightly to 0.47%, reflecting a modestly steeper yield curve, but this has so far failed to dent risk appetite.

    NY session focus: All eyes will be on the 10:00 ET release of the ISM Manufacturing PMI (forecast 53.3) and ISM Manufacturing Prices (forecast 85.3). A strong print could further solidify the rally, while a miss may trigger a pullback. Key levels to watch are 7622.00 as immediate resistance and 7585.50 as intraday support. The trade that’s working is long tech, but the risk is a broader market correction if macro data disappoints and oil prices continue their climb. FOMC Member Powell speaks at 20:30 ET — expect comments on inflation and the economic outlook, but given that it is an acceptance speech, market impact may be limited. The pain trade is a sharp rotation out of tech and into value stocks.

  • Nasdaq 100 Poised for Further Gains on Tech Strength – Monday, 1 June

    Where we are: Nasdaq futures are currently trading at 30456.50, up 0.10% and near the top of the overnight range of 30362.75-30592.25. The cash Nasdaq 100 closed Friday at 26972.62, and the overnight action suggests continued upward momentum. We’re watching the 30600 level in futures as the next key resistance.

    What’s driving it: Strength in tech continues to be the primary driver, amplified by positive sentiment surrounding AI and Nvidia’s latest announcements. With no fresh domestic data yet, the underlying bid is supported by the relatively stable US yield environment, with the 10-year at 4.452% and the 2-year at 4.037%. The slightly weaker dollar, with the DXY at 99.06, is providing a tailwind, but the dominant factor remains the AI-fueled enthusiasm for tech stocks.

    • Powell’s scheduled speech later today, following his acceptance remarks from earlier, could offer further insight into the Fed’s outlook, although it’s unlikely to materially shift the current market narrative.
    • The CFTC data reveals a crowded short positioning in the Nasdaq 100, with net non-commercial positions at -6,085 contracts, sitting in the 2nd percentile on a 52-week lookback. This leaves the index vulnerable to a squeeze if the rally continues.
    • Asian markets showed strong performance overnight, with the Nikkei up 0.92%, providing additional momentum heading into the NY session.

    NY session focus: Keep an eye on the 10:00 ET release of the ISM Manufacturing PMI and Prices Paid data; stronger-than-expected prints could temper the tech rally by reigniting inflation concerns. The key levels to watch are 30600 on the upside and 30360 on the downside. The current trade is long tech, but the risk lies in an unexpected hawkish turn from Powell or a surprisingly strong inflation print. The pain trade would be a sharp reversal in tech sentiment leading to a significant short squeeze in other sectors.

  • Dow Eyes Fresh Record Highs Awaiting ISM – Monday, 1 June

    Where we are: The Dow Jones cash index is currently trading at 51033, up 259 points, or 0.51%, having already probed as high as 51094. Futures are printing 51233, up 184 points. The overnight range saw a low of 50999 and a high of 51382. The Dow continues to build on Friday’s gains, poised to test fresh all-time highs.

    What’s driving it: The underlying bid in US equities continues, supported by positive sentiment from the tech sector detailed in analyst calls, even as broader macro headwinds persist. The 2s10s spread is widening, currently at 0.47%, suggesting some steepening of the curve. With no domestic data prints yet this morning, the tape is likely to continue tracking risk until this morning’s ISM data release. Powell’s planned speech tonight is unlikely to move the dial.

    • The ISM Manufacturing PMI at 10:00 ET is expected to show continued expansion, printing at 53.3 vs a prior of 52.7.
    • ISM Manufacturing Prices, also at 10:00 ET, is expected to edge higher to 85.3 from 84.6, likely adding to inflation concerns.
    • Net non-commercial positioning is moderately short the Dow at -9,324 contracts. A strong bid today could prompt a squeeze.

    NY session focus: All eyes will be on the 10:00 ET release of the ISM Manufacturing PMI and ISM Manufacturing Prices. A stronger-than-expected print on the prices paid component could weigh on risk assets and see the Dow pare gains. Key levels to watch are resistance at the intraday high of 51382 and support at 50999. Long Dow remains the working trade, but is vulnerable to an inflation surprise. Powell speaks again at 20:30 ET. The pain trade here is a sharp risk-off move sparked by unexpected macro tightening, forcing shorts to cover.

  • NY Session Tactical Brief – Friday, 29 May

    Regime: Mixed, with VIX at 16.29 reflecting contained risk, but rising US 10Y yield at 4.439% suggesting real-rate concerns.

    Today’s market themes:

    • Dominant: Real-rate repricing as inflation proves stickier than expected, driving USD strength and pressuring risk assets.
    • Secondary: Geopolitical tensions (Iran) and its impact on oil supply.

    The setup: Markets are pricing in a more hawkish Fed, underpinned by resilient economic data and persistent inflation. Short equities, targeting a dip in S&P 500 to 7500, with a stop loss at 7600. Risk is a dovish surprise from BoE Gov Bailey’s speech or weaker-than-expected Canadian GDP.

    Watch list (native time per event):

    • 08:29 CET EUR: German Prelim CPI m/m (forecast 0.1%, prior 0.6%)
    • 09:20 London GBP: BOE Gov Bailey Speaks
    • 08:30 ET CAD: GDP m/m (forecast 0.1%, prior 0.2%)

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Hawkish Fed rhetoric, resilient data, rising yields.
      • Cross: Global risk aversion, EUR/USD weakness.
      • Levels: Support 98.90, Resistance 99.20.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): ECB’s mild easing bias, weaker growth data.
      • Cross: DXY strength, widening US-DE 10Y spread.
      • Levels: Support 1.1620, Resistance 1.1660.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE dovish tilt, potential service CPI weakness.
      • Cross: DXY strength, negative US-UK 10Y spread.
      • Levels: Support 1.3400, Resistance 1.3460.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ slow normalization, intervention unlikely near-term.
      • Cross: Rising US 10Y, DXY strength, risk-on mood.
      • Levels: Support 159.00, Resistance 159.50.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): Weaker GDP, sensitivity to oil price moves.
      • Cross: DXY strength, widening US-CA 10Y spread.
      • Levels: Support 1.3780, Resistance 1.3840.
    • AUD/USD (Aussie):
      • Direction: Neutral.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, China growth uncertainty.
      • Levels: Support 0.7150, Resistance 0.7180.
    • NZD/USD (Kiwi):
      • Direction: Neutral.
      • Domestic (NZ): RBNZ rate hike expectations, dairy price watch.
      • Cross: DXY strength, risk sentiment.
      • Levels: Support 0.5930, Resistance 0.5985.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias, low Swiss yields.
      • Cross: DXY strength, diminishing safe-haven appeal.
      • Levels: Support 0.7800, Resistance 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral.
      • Domestic: Relative CB stance + yields: EUR/GBP BoE more hawkish, EUR/JPY BoJ less hawkish, GBP/JPY both dovish.
      • Cross: DXY, risk sentiment influences cross-of-crosses dynamics.
      • Levels: Monitor each cross’s intra-day range.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields, muted breakevens.
      • Cross: DXY strength, risk-off reducing demand.
      • Levels: Support 4500, Resistance 4580.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Subdued industrial demand, weak gold.
      • Cross: DXY strength, risk aversion hurting industrial metals.
      • Levels: Support 7500, Resistance 7700.
    • WTI / Brent:
      • Direction: Bearish.
      • Domestic (asset-specific): Potential US-Iran agreement easing supply risks.
      • Cross: DXY strength, risk-off sentiment.
      • Levels: WTI Support 86.50, Resistance 89.00.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns, LME inventory levels.
      • Cross: DXY strength, global growth proxy weakening.
      • Levels: Support 635, Resistance 645.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Rising yields, earnings concerns.
      • Cross: VIX stabilizing, but fragile; global risk tone negative.
      • Levels: Futures support 7570, Cash resistance 7570.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Rising real yields, mega-cap vulnerability.
      • Cross: Rates-sensitivity, VIX uncertainty.
      • Levels: Support 30200, Resistance 30400.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Mixed earnings, cyclical sensitivity.
      • Cross: Bond-yield reaction, less sensitive than tech.
      • Levels: Support 50700, Resistance 50900.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): Sterling strength capping gains.
      • Cross: Global risk-off offset by weaker GBP.
      • Levels: Support 23300, Resistance 23550.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Bund yields rising, weak EU data.
      • Cross: US tech weakness, DXY strength adding pressure.
      • Levels: Support 25000, Resistance 25200.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY weakness supportive short-term, BoJ uncertainty.
      • Cross: US tech correlation, overall risk sentiment.
      • Levels: Support 65000, Resistance 66500.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Weak ETF flows, elevated funding rates.
      • Cross: DXY strength, risk aversion hitting crypto assets.
      • Levels: Support 73000, Resistance 74000.

    Positioning watch: JPY is crowded short (4th percentile), and AUD is crowded long (98th percentile). A hawkish surprise from the BoJ or disappointing China data could trigger a painful squeeze.

    The pain trade: A surprisingly dovish BOE and weak US data, fueling a rapid unwinding of USD longs and a squeeze of crowded JPY shorts.

  • DXY Creeps Higher, Fed Patience Still Paramount – Friday, 29 May

    Where we are: The DXY is currently trading at 99.01, up 0.07% on the day and holding near the top of its intraday range of 98.90-99.15. The index is attempting to build on yesterday’s gains, trading slightly above the prior NY close near 98.94. Immediate resistance is seen at the intraday high of 99.15, while support should emerge near the 98.90 level.

    What’s driving it: The dominant driver remains the market’s assessment of the Fed’s reaction function, which is currently priced for a patient hold. Recent commentary from Fed officials, such as Schmid, reaffirms the Committee’s focus on inflation and data dependency. With the Fed funds target range at 4.25-4.50% and the dot plot suggesting only two cuts in 2026, the Dollar is benefiting from the perception of a higher-for-longer rate environment relative to other developed markets.

    • US 10Y yields are edging higher, currently at 4.439%, providing modest support to the Greenback.
    • The 2s10s spread remains inverted at 0.46%, a lingering recessionary signal that could cap further Dollar upside.
    • CFTC data shows speculators are modestly short USD (-479 contracts), suggesting room for a short squeeze if the data continues to favour a hawkish Fed narrative.

    NY session focus: All eyes will be on risk sentiment in the early part of the session. No major US data releases are scheduled today, meaning the focus will be on any further wire headlines or intraday shifts in US yields to determine Dollar direction. Watch for a break above 99.15 to open a path to 99.30, while a move below 98.90 could trigger a test of 98.70. The trade that is working is buying dips in the DXY, while the trade at risk is further shorting the Greenback without a clear catalyst. The pain trade would be a significant risk-on rally that undercuts the Dollar’s yield advantage.

  • S&P 500 Treads Water Ahead of Key Data – Friday, 29 May

    Where we are: S&P 500 futures are currently trading at 7588.25, virtually unchanged on the day. The overnight range has been tight, between 7573.25 and 7595.75. This level is just below yesterday’s cash close of 7563.60, suggesting a slight consolidation after a strong run.

    What’s driving it: The underlying US macro picture remains supportive, with the 10Y real yield continuing to drift lower to 2.09%, a tailwind for risk assets. However, the market is awaiting fresh catalysts, with no major US data releases scheduled before the New York open. The DXY is slightly firmer at 99.01, providing a modest headwind, while the 10Y yield is mirroring this with a slight uptick to 4.439%.

    • Dell’s impressive AI server revenue growth of 757% has fueled positive sentiment, evident in the pre-market surge of its stock, underscoring the ongoing AI-driven market narrative.
    • Speculator positioning in the S&P 500 remains modestly short, with net non-commercial contracts at -134,906. This relatively neutral stance (60th percentile) suggests limited squeeze potential in either direction.
    • WTI Crude remains under pressure after recent geopolitical news, still sitting below $100, alleviating some inflation concerns and supporting risk sentiment.

    NY session focus: All eyes will be on the sustainability of the AI rally and any fresh developments regarding the US-Iran discussions around Strait of Hormuz vessel flows. Watch for reactions around 7600, a key psychological level for the S&P 500. A break above this level could trigger further upside, while a failure to hold 7570 could invite a test of the lower end of the overnight range. The working trade remains long AI names and beneficiaries. The pain trade is a sudden hawkish shift in Fed rhetoric that spooks the bond market.

  • Nasdaq 100 Calm Before the Storm – Friday, 29 May

    Where we are: Nasdaq futures are currently trading at 30320.50, down -0.03% and holding within a tight range of 30216.50-30370.50 established overnight. The cash Nasdaq 100 closed yesterday at 26917.47. We’re effectively flat heading into the US open, digesting yesterday’s gains and awaiting fresh catalysts.

    What’s driving it: The domestic picture is one of measured calm. US 10-year yields are steady at 4.439%, and the 2-year is holding at 4.023%. Despite the relative quiet in yields, falling real yields are providing a tailwind for gold and indirectly supporting risk assets. The market is still pricing in a dovish reaction function from the Fed, and the positioning in Nasdaq futures suggests any positive earnings or AI news will be aggressively bought, triggering a potential squeeze, especially with net non-commercial positioning still showing a crowded short stance at the 4th percentile.

    • The 2s10s spread has widened to 0.46%, suggesting a slight easing of recession fears.
    • Speculator positioning in Nasdaq 100 futures remains net short, at the 4th percentile, highlighting a squeeze risk on any positive catalyst.
    • Dan Ives’ comments, predicting the Nasdaq to top 30,000 by 2027 due to AI, are fueling bullish sentiment in the tech sector.

    NY session focus: All eyes will be on the US data slate with the 08:30 ET prints looming large. A beat on core PCE could reignite inflation fears and pressure tech, while a miss could fuel further upside. Watch the 30,400 level on the upside; failure to hold 30,200 opens the door to a test of 30,000. The Dell trade is clearly working. The pain trade is a hawkish surprise pushing yields higher, triggering a sharp Nasdaq selloff.

  • Dow Jones Set for Further Gains – Friday, 29 May

    Where we are: Dow futures are currently trading at 50860, up 110 points or 0.22% on the day. The cash Dow closed yesterday at 50669, and the futures have traded in a range of 50704-50904 so far today. This suggests a positive open in New York, potentially pushing the Dow to fresh record highs.

    What’s driving it: Despite slight weakness in S&P 500 and Nasdaq futures, the Dow continues to find support, likely driven by strength in financial and consumer defensive sectors. The underlying strength in the US economy, as reflected in recent Costco sales data indicating strong gasoline demand, continues to underpin the market. Furthermore, while US 10Y yields are slightly higher at 4.439, the 2s10s spread remains positive at 0.46%, suggesting a less inverted yield curve and potentially easing recession fears. We see a supportive environment for continued gains in the Dow.

    • Costco’s same-store sales rising 9.8% during its third quarter points to robust consumer spending.
    • Net non-commercial positioning is moderately short at -10,765 contracts, suggesting room for further upside as shorts cover.
    • The VIX is down to 16.29, reflecting decreased market volatility and increased investor confidence.

    NY session focus: Focus for the New York session will be on monitoring the performance of key Dow components and any further developments regarding US-Iran relations, especially given its potential impact on oil prices and inflation. Keep an eye on the 10-year yield; a break above 4.50% could dampen enthusiasm. Initial resistance is at the intraday high of 50904. The trade that’s working is long Dow, short Nasdaq. The trade that’s at risk is short Dow given the overall positive momentum. The pain trade is a sudden risk-off move sparked by geopolitical jitters or a hawkish Fed surprise.

  • NY Session Tactical Brief – Thursday, 28 May

    Regime: Risk-off, driven by rising Mideast tensions and a flight to safety, reflected in falling US yields and a VIX above 17.

    Today’s market themes:

    • Oil supply scare: Geopolitical risks in the Black Sea and Middle East fuel concerns over energy supply, boosting crude prices.
    • Core PCE watch: Markets brace for key US inflation data, which could dictate the Fed’s near-term policy path.
    • Crowded shorts at risk: GBP, JPY and Nasdaq are crowded short based on the CFTC positioning.

    The setup: Rising geopolitical risks are pushing investors into safe-haven assets, weakening equities and boosting oil. Focus is on the 08:30 ET Core PCE print. A surprise to the upside could trigger a risk-off move, whereas a downside surprise could trigger a rally. US 10Y is at 4.479%.

    Watch list (native time per event):

    • 14:00 NZT NZD: Annual Budget Release (Medium)
    • 08:30 ET USD: Core PCE Price Index m/m (High) forecast 0.3%, prior 0.3%
    • 08:30 ET USD: Prelim GDP q/q (High) forecast 2.0%, prior 0.7%

    Bias by asset:

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

    • DXY:
      • Direction: Neutral to slightly lower.
      • Domestic (US): Fed policy dependent on PCE; US yields are key.
      • Cross: Risk-off flows provide some support; but geopolitical tension is negative.
      • Levels: Support at 99.11, resistance at 99.50.
    • EUR/USD:
      • Direction: Neutral.
      • Domestic (EU): Lagarde’s commentary; Bund yields stable; watching sovereign spreads.
      • Cross: DXY weakness offsetting risk-off; US-DE 10Y spread supportive.
      • Levels: Resistance at 1.1640, support near 1.1585.
    • GBP/USD (Cable):
      • Direction: Neutral to bearish.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength limiting upside; risk-off sentiment hurts Cable.
      • Levels: Resistance at 1.3430, support at 1.3370.
    • USD/JPY:
      • Direction: Neutral to bullish.
      • Domestic (JP): Intervention risk remains high; JGB yields capped by BoJ.
      • Cross: US 10Y still above 4.45%; DXY support; risk-off may trigger unwinds.
      • Levels: Support at 159.30, resistance near 159.65.
    • USD/CAD (Loonie):
      • Direction: Neutral to bullish.
      • Domestic (CA): WTI price support; BoC likely on hold in June.
      • Cross: DXY strength; US-CA 10Y spread holds.
      • Levels: Support around 1.3835, resistance near 1.3870.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): RBA likely to pause; iron ore volatility.
      • Cross: DXY strength; China growth concerns.
      • Levels: Resistance at 0.7145, support around 0.7100.
    • NZD/USD (Kiwi):
      • Direction: Neutral.
      • Domestic (NZ): Annual budget release; RBNZ expectations muted.
      • Cross: DXY strength limiting upside; risk-off sentiment weighs.
      • Levels: Resistance near 0.5910, support around 0.5865.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias; Swiss yields suppressed.
      • Cross: Safe-haven demand into USD; DXY strength.
      • Levels: Support at 0.7865, resistance near 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bearish.
      • Domestic: ECB vs BoE, BoJ; relative yields.
      • Cross: DXY impact on each leg; risk-off impacting JPY crosses.
      • Levels: Monitor range breaks from current levels.
    • XAU (Gold):
      • Direction: Bullish.
      • Domestic (asset-specific): Falling real yields supporting; breakevens stable.
      • Cross: Risk-off flows; DXY.
      • Levels: Support near 4400, resistance at 4490.
    • XAG (Silver):
      • Direction: Neutral.
      • Domestic (asset-specific): Industrial demand, Gold-Silver ratio monitoring.
      • Cross: DXY and risk appetite dictate direction.
      • Levels: Support near 7200, resistance at 7500.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Supply concerns, OPEC policy, EIA data.
      • Cross: Risk-off bid; DXY.
      • Levels: Monitor for breakouts above $93.00 and $96.00 respectively.
    • Copper:
      • Direction: Neutral.
      • Domestic (asset-specific): China demand, LME stock levels, supply side constraints.
      • Cross: Global growth concerns.
      • Levels: Support near $624.00, resistance near $636.00.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Fed policy / US yield reaction; earnings season ongoing.
      • Cross: VIX spikes on geopolitical concern; risk-off tone prevails.
      • Levels: S&P fut: resistance at 7557, support at 7505.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Mega-cap earnings; real yield sensitivity on long-duration assets.
      • Cross: Rates sensitivity and elevated VIX.
      • Levels: Resistance at 30135, support near 29765.
    • US30 (Dow):
      • Direction: Bearish.
      • Domestic (US): Cyclical tone; yield movements influencing industrial/financial sectors.
      • Cross: Bond yield reaction.
      • Levels: Resistance at 50819, support at 50576.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Sterling weakness; Gilt yield reactions.
      • Cross: Global risk; US market sentiment dampening performance.
      • Levels: Resistance near 23390, support around 23190.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Bund yields; ECB rhetoric; IFO / ZEW.
      • Cross: US tech weakness impacting; DXY.
      • Levels: Resistance at 25175, support at 24995.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY moves, JGB yields, BoJ comments influencing sentiment.
      • Cross: US tech pressure impacting; overall risk tone.
      • Levels: Resistance near 65165, support around 63880.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates, ETF flows, and on-chain data under pressure.
      • Cross: DXY is supportive but broader risk-off pulls it down.
      • Levels: Resistance near 74500, support around 72500.

    Positioning watch: CFTC data shows crowded shorts in GBP, JPY and Nasdaq and crowded longs in AUD, Copper and Bitcoin. Any positive surprise from economic data (especially the US PCE) or easing of geopolitical tensions could trigger a short squeeze in GBP, JPY and Nasdaq.

    The pain trade: A weaker-than-expected Core PCE print would trigger a relief rally in risk assets, squeezing shorts in GBP, JPY and Nasdaq, and pressuring the DXY and pushing real-rates lower.