Category: US

  • DXY Drifts Lower as Markets Await Key Data – Thursday, 28 May

    Where we are: The DXY currently trades at 99.13, down 0.13% on the day, holding above the session low of 99.11 but well off the overnight high near 99.50. Dollar weakness has been broad-based as the index retreats from recent seven-week highs. US 2 and 10 year yields are slightly lower, reflecting a cautious tone ahead of the US data dump.

    What’s driving it: The near-term dollar direction hinges on this morning’s US data deluge, with the Core PCE Price Index at the forefront. The Fed remains firmly in a patient hold, and a hot PCE print would fuel speculation of a policy misstep and further delay rate cut expectations, supporting the Greenback. Fed officials, including Jefferson, have recently reiterated concerns about inflation risks, particularly from energy price surges, reinforcing the data-dependent stance. Firmer crude is likely exacerbating these concerns; WTI is holding above $112/bbl.

    • The 10-year Breakeven Inflation rate sits at 2.39%, suggesting inflation expectations remain relatively well-anchored ahead of the PCE print.
    • US 2Y yields are trading down to 4.049%, suggesting a slightly dovish tilt ahead of the data.
    • Speculator positioning remains modestly short the USD (-479 contracts), leaving room for a potential squeeze if data surprises to the upside.

    NY session focus: All eyes are on the 08:30 ET releases: Core PCE Price Index, Prelim GDP, GDP Price Index, and Unemployment Claims. A hotter-than-expected PCE would likely send the DXY towards 99.50 and potentially test the 99.80 resistance level. A weaker print could see a test of 98.80. New Home Sales at 10:00 ET will provide further insight into the housing market’s resilience. The trade at risk is short USD/JPY, as a hawkish repricing could fuel a significant rally. The pain trade is a surprisingly dovish print followed by a recovery in risk sentiment, pushing the DXY towards the lows of the week.

  • S&P 500 Drifts Lower Ahead of Key Data – Thursday, 28 May

    Where we are: S&P 500 futures are currently trading at 7536.25, down 18.50 points or -0.24% on the day, sitting near the bottom of their overnight range of 7506.25-7557.50. This is below yesterday’s cash close of 7520.40 but still within yesterday’s cash range of 7499.70-7530.70. The index appears to be consolidating after the recent run-up, lacking a clear catalyst for further upside.

    What’s driving it: The market is in a holding pattern ahead of the 08:30 ET data dump, with traders likely hesitant to commit to a strong direction. The Fed’s Cook and Jefferson speeches offered little new information, leaving the focus squarely on the incoming economic data. A steeper-than-forecast GDP print may push the index lower, whilst a hotter Core PCE m/m might signal a larger than anticipated rate hike. Despite a modestly short speculative positioning in S&P 500 futures, any unexpectedly hawkish data is likely to accelerate the sell-off, triggering a short squeeze on the other side of the trade.

    • The US 10Y yield is at 4.479%, down 2.2bp on the day, indicating some flight to safety.
    • The 10Y Breakeven Inflation rate ticked down to 2.39% yesterday, reflecting waning inflation expectations.
    • Commodity prices remain elevated, with WTI crude at $112.25, potentially adding to inflationary pressures despite the slightly declining break-evens.

    NY session focus: All eyes will be on the 08:30 ET data release, specifically the Core PCE Price Index, Prelim GDP, and Unemployment Claims. A combination of strong growth and sticky inflation could spook the market, potentially pushing the S&P 500 down towards the 7500 level. Conversely, weaker-than-expected data could provide a boost, targeting the overnight high of 7557.50. The trade at risk is a complacent long position expecting continued easy gains; the working trade is a nimble two-way book. The pain trade would be a Goldilocks scenario – strong growth alongside moderating inflation – triggering a sharp rally.

  • Nasdaq 100 Faces Headwinds Ahead of Key Data – Thursday, 28 May

    Where we are: Nasdaq futures are currently trading at 30027.50, down 0.28% after ranging between 29766.75 and 30135.75 overnight. The cash Nasdaq 100 closed yesterday at 26674.73 and is likely to open weaker, with futures below the overnight high. Key support lies around the 29750 level in futures, while resistance is around 30150.

    What’s driving it: US yields are softening slightly this morning, with the 10-year at 4.479%, down 2.2bp. This, in turn, is lending very modest support, but the overall tone is cautious ahead of a crucial data dump at 08:30 ET. Focus will be on Core PCE, Prelim GDP, and Unemployment Claims; any surprises here could trigger a sharp move, given the market’s sensitivity to inflation and growth data. Further weighing on sentiment are continued concerns over AI sustainability after hawkish comments from FOMC members, a factor amplified by upward PCE price pressures.

    • Jefferson spoke overnight on global economic developments.
    • The 2s10s spread is at 0.48%, but has flattened slightly over the past 24 hours, a sign that the market may be thinking about rates remaining higher for longer.
    • Speculator positioning in Nasdaq 100 futures is crowded short at the 4th percentile with net non-commercial contracts at -1,420, a squeeze risk on a positive surprise.

    NY session focus: Today’s session will hinge on the 08:30 ET data releases. Strong PCE or GDP prints would likely pressure Nasdaq, pushing yields higher and potentially triggering a short squeeze given the crowded positioning. Conversely, weaker data could fuel a rally. Keep an eye on the DXY, currently at 99.13; further dollar weakness could provide some support. The trade that’s working is fading rallies into resistance near 30150, while the trade at risk is chasing breakouts without confirmation from the data. The pain trade for Nasdaq is a surprisingly hawkish inflation number combined with robust GDP, forcing a rapid repricing of Fed expectations.

  • Dow Bulls Ready for GDP Test – Thursday, 28 May

    Where we are: The Dow Jones futures are currently trading at 50659, down 151 points or 0.30% on the day, after a relatively tight overnight range of 50576-50819. This is slightly below yesterday’s cash close of 50644, which itself gained 157 points on the day. The futures market is currently holding above the 50500 level, but showing signs of vulnerability pre-market.

    What’s driving it: The market’s cautious tone ahead of the 08:30 ET US data dump is the primary driver. Specifically, the core PCE and prelim GDP figures are front and center, as the market tries to gauge the Fed’s likely path. We’ve seen a notable easing in yields across the curve, with the 10Y at 4.479% and the 2Y at 4.049%, as the market continues to digest recent Fed commentary and lower expectations for aggressive rate hikes. Lower real yields are giving gold a tailwind, and equity markets are also benefitting.

    • The US 10Y yield is down 2.2bp on the day at 4.479%, extending its recent decline, reflecting easing inflation concerns.
    • Net non-commercial Dow positioning is moderately short at -10,765 contracts, but increased 7,203 w/w.
    • Jefferson spoke overnight, but his remarks regarding the US economy and global developments were not market moving.

    NY session focus: All eyes are on the 08:30 ET data trifecta: Core PCE, Prelim GDP, and Unemployment Claims. A beat on GDP combined with sticky PCE could reignite inflation fears and send yields higher, weighing on the Dow. Conversely, a soft GDP print alongside a benign PCE could fuel dovish expectations and provide a boost. Key levels to watch are 50500 as initial support and 50800 as resistance. The trade at risk is shorting the Dow, particularly if the data comes in dovish. The pain trade would be a hot GDP and PCE print, triggering a significant sell-off and forcing shorts to cover.

  • NY Session Tactical Brief – Wednesday, 27 May

    Regime: Mixed. VIX sits at 16.59, while US 2Y yields are edging higher and the DXY hovers around 98.95, signaling risk-off sentiment battling positive momentum.

    Today’s market themes:

    • Strait of Hormuz tension eases: Oil prices plummet on reports of progress restoring shipping through the Strait, impacting commodity currencies.
    • Australian CPI miss: Cooler-than-expected Australian inflation data pressure the AUD, raising RBA policy questions.
    • RBNZ telegraphs tightening: The Reserve Bank of New Zealand holds steady but signals future rate hikes, boosting the Kiwi.

    The setup: Oil’s sharp drop after Iran’s signal about Strait of Hormuz shipping is cascading through markets. Watch CAD and commodity FX for further weakness if oil sustains its losses. A break below $87.80 in WTI could trigger a further sell-off.

    Watch list (native time per event):

    • 11:30 AEST AUD: CPI y/y (forecast 4.4%, prior 4.6%)
    • 14:00 NZT NZD: Official Cash Rate (forecast 2.25%, prior 2.25%)
    • 09:00 JST JPY: BOJ Gov Ueda Speaks

    Bias by asset:

    • DXY:
      • Direction: Sideways.
      • Domestic (US): Fed signaling mixed / inflation expectations remain sticky.
      • Cross: Oil impact / safe-haven demand ebb and flow.
      • Levels: Support 98.80 / Resistance 99.20.
    • EUR/USD:
      • Direction: Neutral.
      • Domestic (EU): ECB hawks vs doves battle / Bund yields rangebound.
      • Cross: DXY weakness offset by risk-off flow / US-DE 10Y widening.
      • Levels: Support 1.1630 / Resistance 1.1680.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE cut expectations building / Gilt yields under pressure.
      • Cross: DXY strength cap / US-UK 10Y divergence.
      • Levels: Support 1.3400 / Resistance 1.3480.
    • USD/JPY:
      • Direction: Bullish, but watch intervention.
      • Domestic (JP): BoJ cautious / Ueda verbal intervention / JGB constrained.
      • Cross: US 10Y supportive / risk-on flow offset by intervention threat.
      • Levels: Support 159.00 / Resistance 159.50.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC dovish / CAD vulnerable to oil rout.
      • Cross: DXY strength / US-CA 10Y supportive.
      • Levels: Support 1.3800 / Resistance 1.3850.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): Weak CPI raises RBA pause risk.
      • Cross: DXY strength / US-AU 10Y negative spread / China uncertainty.
      • Levels: Support 0.7100 / Resistance 0.7180.
    • NZD/USD (Kiwi):
      • Direction: Bullish.
      • Domestic (NZ): RBNZ hawkish signal / OCR supports.
      • Cross: DXY strength offset by domestic policy tailwind.
      • Levels: Support 0.5850 / Resistance 0.5920.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength / safe-haven fading.
      • Levels: Support 0.7820 / Resistance 0.7880.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed.
      • Domestic: Relative BoE/ECB/BoJ stance driving flows.
      • Cross: DXY chop / risk sentiment mixed.
      • Levels: Monitor individual charts for key levels.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields hurt gold / CB demand slows.
      • Cross: DXY strength / reduced safe-haven bid.
      • Levels: Support 4450 / Resistance 4500.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Industrial demand concerns / Gold underperformance.
      • Cross: DXY strength / risk aversion fading.
      • Levels: Support 7350 / Resistance 7500.
    • WTI / Brent:
      • Direction: Bearish.
      • Domestic (asset-specific): Strait of Hormuz progress weighs / EIA build risk.
      • Cross: DXY strength headwind / global growth worries.
      • Levels: WTI Support $87.50 / Resistance $90.00.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns / LME inventories rise.
      • Cross: DXY impact / global growth proxy weakens.
      • Levels: Support 630 / Resistance 640.
    • SPX:
      • Direction: Sideways.
      • Domestic (US): Earnings season tapering / Fed watch / yield sensitivity.
      • Cross: VIX stable / global growth concerns offsetting.
      • Levels: Futures support 7530 / resistance 7570.
    • NDX:
      • Direction: Sideways.
      • Domestic (US): Mega-cap results mixed / real yield pressure building.
      • Cross: Higher rates sensitivity / VIX benign.
      • Levels: Support 30000 / Resistance 30400.
    • US30 (Dow):
      • Direction: Sideways.
      • Domestic (US): Cyclical earnings mixed / bond yields a factor.
      • Cross: Sentiment dependent on yields / relative valuation.
      • Levels: Support 50500 / Resistance 50800.
    • UK100 (FTSE):
      • Direction: Bullish.
      • Domestic (UK): Sterling weakness helps / commodity strength supports.
      • Cross: Global risk on / US data impact.
      • Levels: Support 23300 / Resistance 23550.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech influence / DXY impact / risk tone.
      • Levels: Support 25200 / Resistance 25400.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY intervention risk / profit-taking after rally.
      • Cross: US tech / risk off.
      • Levels: Support 64500 / Resistance 65500.
    • BTC:
      • Direction: Sideways.
      • Domestic (asset-specific): ETF flows slowing / funding rates elevated.
      • Cross: DXY impact / risk correlated.
      • Levels: Support $75000 / Resistance $76000.

    Positioning watch: CFTC data shows crowded short positions in GBP and JPY, suggesting squeeze risk if data surprises positively. AUD and Copper are crowded longs, vulnerable to disappointment.

    The pain trade: A strong US data print today, particularly on inflation, would force a repricing of Fed expectations, hammering bonds and risk assets as the DXY surges.

  • Dollar Drifts Lower as Yields Ease Further – Wednesday, 27 May

    Where we are: The DXY currently sits at 98.95, down 0.07% on the day, within a 98.89-99.11 range. The index is consolidating losses seen yesterday after the broad index closed at 119.2868 on Friday. The DXY remains below the psychologically important 99.00 level, struggling for sustained momentum.

    What’s driving it: Easing Treasury yields are weighing on the Dollar this morning. The Fed remains on a patient hold, as reaffirmed by the March meeting minutes, with cuts conditional on continued disinflation. Further weighing on the dollar are investors scaling back expectations for near-term rate hikes. The market is waiting for PCE inflation data for further clues on the Fed’s future policy direction.

    • The US 10Y yield is currently at 4.468%, down 1.1 bps on the day.
    • The US 2Y yield is at 4.041%, up 0.4 bps. The 2s10s spread is steepening, now at 0.49%.
    • Net non-commercial positioning in the Dollar is modestly short, with -479 contracts. This is the 73rd percentile, reducing squeeze risk.

    NY session focus: All eyes will be on any further moves in Treasury yields, watching if the 10Y can hold above 4.44%. Keep an eye on risk sentiment given the S&P futures bid. We will watch for any comments from Fed officials, though none are scheduled today. If yields continue to fall, look for a test of 98.50 on the DXY. The pain trade is a hawkish surprise that sends yields sharply higher, triggering a DXY squeeze towards 99.50.

  • S&P 500 Aims for 8,000 as AI Optimism Persists – Wednesday, 27 May

    Where we are: S&P 500 futures are trading at 7558.00, up 22.75 points or 0.30%, and testing the upper end of today’s 7530.00-7570.00 range. This follows a positive close in the S&P 500 cash market at 7519.10, a gain of 7.30 points. Sentiment remains buoyant after yesterday’s record closing highs driven by AI enthusiasm.

    What’s driving it: The AI narrative continues to underpin the market, with Goldman strategists raising their S&P 500 target to 8,000 based on AI and strong earnings expectations. This, coupled with Micron joining the $1 trillion club, is feeding into the ongoing rally. While the latest Fed minutes don’t offer immediate catalysts, the underlying US economic backdrop remains supportive, with tech leading the charge.

    • Goldman Sachs raised its S&P 500 target to 8,000, citing AI and earnings strength.
    • Micron’s market capitalization surpassed $1 trillion, buoying chip sector sentiment.
    • CFTC data shows net non-commercial positioning at -134,906 contracts, modestly short but near the 60th percentile, which doesn’t suggest immediate squeeze risk.

    NY session focus: All eyes will be on Salesforce earnings after the bell, which are expected to either confirm or challenge the prevailing AI-driven optimism. Key levels to watch are 7530.00 as initial support and 7570.00 as immediate resistance. The trade that’s working is long tech, specifically AI-related stocks, while the trade at risk is short volatility. The pain trade would be a sudden correction driven by disappointing earnings or a hawkish surprise from the Fed speakers down the line. Keep an eye on the US 10Y, currently at 4.468%, as further declines could fuel the rally.

  • Nasdaq Rally Fueled by AI Optimism Continues – Wednesday, 27 May

    Where we are: Nasdaq futures are trading at 30307.25, up 0.83% on the session and near the overnight high of 30370.75. This extends yesterday’s rally, which saw the Nasdaq Composite hit a record closing high. The index is looking to open well above the prior New York close, boosted by overnight strength.

    What’s driving it: The relentless bid in AI-related stocks continues to be the primary driver, with Micron’s surge adding fuel to the fire. While the Fed minutes from April’s discount rate meeting are unlikely to contain fresh insights, the underlying narrative of resilient growth and the market’s interpretation of a dovish Fed underpin the risk-on sentiment. The slight easing in Treasury yields, with the 10-year down to 4.468%, is providing further support.

    • Hedge funds are reportedly “doubling down” on AI stocks, according to Goldman Sachs, reinforcing the momentum trade.
    • Micron is leading the charge, with analyst upgrades and a 19.3% surge yesterday propelling it towards a $1 trillion market cap.
    • Speculator positioning in Nasdaq 100 futures remains crowded short at the 4th percentile, raising squeeze risk should the rally persist.

    NY session focus: Focus will be on whether the early momentum can be sustained, especially as the S&P 500 and Nasdaq also trade at record highs. Keep an eye on the 10-year yield; a break below 4.40% could accelerate the rally. Key levels to watch are 30,500 on the upside and 30,000 as initial support. The working trade remains long AI-linked semis, but Salesforce earnings after the bell could introduce some volatility. The pain trade here is a sharp rotation out of tech into value, triggered by an unexpected hawkish shift in Fed rhetoric.

  • Dow Jones Futures Ride Tech Rally to New Highs – Wednesday, 27 May

    Where we are: Dow futures are currently trading at 50616, up 107 points, or 0.21%, after printing an overnight high of 50797. The cash Dow closed yesterday at 50462, and futures trading suggests the market will attempt to recapture that level at the open. The S&P 500 and Nasdaq futures are also pointing to fresh record highs, setting a positive tone for the session.

    What’s driving it: The rally in tech is the primary driver, extending gains seen in the prior session. No fresh domestic catalysts exist this morning. The overall risk-on mood is being supported by easing energy prices, with WTI crude pulling back from recent highs. US 10-year yields are slightly lower at 4.468%, providing a tailwind, while the 2-year yield is holding steady at 4.041%.

    • The 2s10s spread continues to widen, sitting at 0.49%, steepening 6bp on the day.
    • The VIX remains subdued at 16.59, suggesting limited near-term volatility expectations.
    • Net non-commercial positioning in Dow Jones futures is moderately short, with -10,765 contracts, up 7,203 w/w, at the 21st percentile. There is no short-squeeze risk.

    NY session focus: With no major US data releases scheduled before the open, the focus will remain on the tech sector and overall risk sentiment. Watch for any reaction to Salesforce earnings after the bell. Key level to watch on the Dow is the overnight high of 50797; a break above that could trigger further upside. Support lies at 50500. The current trade is to buy dips in tech, but the risk is that the rally becomes overextended. The pain trade for the Dow would be a sharp reversal in tech stocks, triggering a broader market selloff.

  • NY Session Tactical Brief – Tuesday, 26 May

    Regime: Risk-off as higher real yields trigger broad USD strength, with VIX hovering at 16.76 and US 10Y at 4.486%.

    Today’s market themes:

    • Real-rate repricing: Rising US real yields exert downward pressure on risk assets and commodity prices, favoring USD strength.
    • AUD CPI impact: Australian inflation data sets the tone for RBA policy expectations, with potential for a squeeze on crowded AUD longs.
    • RBNZ decision: RBNZ decision and monetary policy statement in focus.

    The setup: US real yields continue their ascent, tightening financial conditions and prompting a broad risk-off move. The crowded AUD long is vulnerable to downside surprise from CPI, and traders will be watching the RBNZ closely. Look for opportunities to fade rallies in risk assets. Support for S&P futures at 7525.

    Watch list (native time per event):

    • 10:00 ET USD: CB Consumer Confidence (forecast 91.9, prior 92.8)
    • 11:30 AEST AUD: CPI y/y (forecast 4.4%, prior 4.6%)
    • 14:00 NZT NZD: RBNZ Official Cash Rate (forecast 2.25%, prior 2.25%)

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Fed hawkish tone / resilient US data / rising US yields
      • Cross: Global risk aversion / EUR weakness / safe-haven demand
      • Levels: Resistance 99.11, support 98.95
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): ECB dovishness / weak HICP / widening sovereign spreads
      • Cross: Strong DXY / widening US-DE 10Y spread / risk-off flows
      • Levels: Resistance 1.1645, support 1.1624
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE caution / soft services CPI / underperforming Gilts
      • Cross: Strong DXY / widening US-UK 10Y spread / risk aversion
      • Levels: Resistance 1.3505, support 1.3465
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ ultra-dovish / no wage growth / intervention rhetoric
      • Cross: Rising US 10Y / DXY strength / risk-on supports carry
      • Levels: Resistance 159.24, support 158.90
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC cautious / sluggish CPI / softer WTI correlation
      • Cross: Strong DXY / widening US-CA 10Y spread
      • Levels: Resistance 1.3821, support 1.3799
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): CPI miss / weaker Iron-Ore, Copper
      • Cross: Strong DXY / US-AU 10Y widening / China slowdown fears
      • Levels: Resistance 0.7176, support 0.7156
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ dovishness / weak dairy prices
      • Cross: Strong DXY / risk-off / US-NZ 10Y divergence
      • Levels: Resistance 0.5872, support 0.5840
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB active easing / low CPI / Swiss yields repressed
      • Cross: DXY strength / unwinding safe-haven positions
      • Levels: Resistance 0.7855, support 0.7827
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bullish, EUR/JPY Bullish, GBP/JPY Bearish
      • Domestic: Relative central bank stance / relative yields
      • Cross: DXY influence / risk appetite dynamics
      • Levels: Use individual daily ranges to guide
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields / declining breakevens / soft CB demand
      • Cross: Strong DXY / risk-off dampening safe-haven bid
      • Levels: Resistance 4615.2, support 4534.4
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Weaker industrial demand / rising Gold-Silver ratio
      • Cross: Strong DXY / Risk-off flows
      • Levels: Resistance 7870.300, support 7576.000
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Geopolitical tensions / OPEC policy / tight supply
      • Cross: DXY pullback/ risk-on flows
      • Levels: Brent resistance 97.07, WTI support 90.37
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns / rising LME stocks
      • Cross: DXY strength / risk-off sentiment
      • Levels: Resistance 646.9700, support 636.3200
    • SPX:
      • Direction: Bearish.
      • Domestic (US): High valuations / Fed hawkish / rising US yields
      • Cross: Elevated VIX / global growth concerns
      • Levels: S&P 500 futures resistance 7565, cash support 7463
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Mega-cap earnings risk / elevated real yields / AI hype fade
      • Cross: Higher rates sensitivity / VIX volatility
      • Levels: Resistance 29972.25, support 29745.50
    • US30 (Dow):
      • Direction: Bearish.
      • Domestic (US): Cyclical slowdown / rising rates hurting industrials
      • Cross: Bond yield upside
      • Levels: Resistance 51132, support 50865
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response
      • Cross: Global risk sentiment
      • Levels: Resistance 23419, support 23169
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): EU political uncertainty
      • Cross: US tech weakness / strong DXY / rising rates
      • Levels: Resistance 25360, support 25181
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response
      • Cross: US tech volatility / risk-off sentiment
      • Levels: Resistance 65309, support 64616
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates too high / ETF selling / on-chain
      • Cross: DXY strength / risk-off / Nasdaq correlation
      • Levels: Resistance 77521, support 76415

    Positioning watch: CFTC data reveals crowded longs in AUD and Copper (>96th percentile) making them vulnerable to negative data surprises. There’s crowded short exposure in GBP, JPY, and Nasdaq.

    The pain trade: A dovish RBNZ or a surprise CPI beat from Australia igniting a short squeeze in AUD, JPY, and GBP while simultaneously reversing the USD rally.

  • Dollar Drifts Higher as Geopolitical Tensions Simmer – Tuesday, 26 May

    Where we are: The DXY is currently trading at 99.05, up +0.07% on the session, having ranged from 98.95 to 99.11 so far today. The index is holding above Friday’s close, consolidating last week’s gains driven by hawkish Fed repricing. Resistance looms around the 99.20 level, while support rests near 98.80.

    What’s driving it: The primary driver remains the market’s assessment of the Fed’s policy path in the face of persistent inflation risks. While the Fed remains on a “patient hold,” the market is pricing in a greater probability of a rate hike before year-end as core CPI has been sticky and payrolls remain firm. This hawkish repricing is pushing up US real yields, with the 10Y TIPS yield rising to 2.18% last week, creating a headwind for gold and supporting the Dollar. Renewed geopolitical uncertainty surrounding Iran and peace talks is further contributing to risk aversion, providing a safe-haven bid for the Greenback.

    • The US 10Y yield is currently trading at 4.486, down 2bp, while the 2Y sits at 4.059, down less than 1bp, keeping the 2s10s curve deeply inverted at 0.43%.
    • Net non-commercial positioning in the Dollar is modestly short at -479 contracts, but this has decreased -3,666 w/w and is only at the 73rd percentile. A squeeze risk may be emerging if geopolitical risks persist.
    • WTI crude at $112.25 continues to apply upward pressure on inflation expectations, complicating the Fed’s task.

    NY session focus: All eyes will be on the 10:00 ET release of the CB Consumer Confidence data; a print below the 91.9 forecast could weigh on the Dollar. Key levels to watch are 99.20 on the upside and 98.80 on the downside. The trade that’s working remains fading risk rallies, but a surprise dovish shift from the Fed or significant progress in Iran peace talks could quickly unwind this. The pain trade would be a surge in risk appetite alongside a weaker-than-expected inflation print, forcing a rapid reversal of hawkish Fed bets.

  • S&P 500 Futures Consolidate Ahead of Confidence Data – Tuesday, 26 May

    Where we are: S&P 500 futures are currently trading at 7545.50, down 18.25 points or 0.24% on the day. The overnight range has been relatively contained between 7525.75 and 7565.00. This compares to the cash S&P 500 which closed at 7473.50 in the prior NY session, suggesting a slight catch-up bid this morning after yesterday’s rally.

    What’s driving it: Concerns about consumer sentiment ahead of the 10:00 ET CB Consumer Confidence release are weighing on risk appetite. The market is pricing in a slight dip to 91.9 from the previous 92.8, and a weaker-than-expected print could exacerbate downside pressure. Firmer real yields, with the 10Y TIPS yield at 2.18%, continue to act as a headwind for equities. The DXY is holding steady around 99.05, offering limited support to risk assets.

    • US 10Y yield is holding around 4.486%, down 2bp on the session, suggesting a slight risk-off tone ahead of the data.
    • Net non-commercial positioning in S&P 500 futures remains modestly short, at -134,906 contracts, leaving room for a potential squeeze if data surprises to the upside.
    • WTI crude oil prices remain elevated around $112.25/bbl, contributing to inflationary concerns and potentially capping equity gains.

    NY session focus: All eyes will be on the 10:00 ET CB Consumer Confidence release. A miss could trigger a move towards the 7500 level in S&P 500 futures, potentially opening up a test of the overnight low at 7525.75. A strong print, however, could see a retest of the overnight high near 7565. The market has been rewarding defensive names and punishing growth so far this week. The pain trade would be a strong consumer confidence print, coupled with continued dovish rhetoric, triggering a rapid unwind of short positions and a move above 7600.

  • Nasdaq Under Pressure Amid Rate Concerns – Tuesday, 26 May

    Where we are: Nasdaq futures are trading at 29919.50, down 0.18% on the day, and within the 29745.50-29972.25 range. The cash Nasdaq 100 is also lower, at 26343.97, marking a 0.14% decline. This puts us below yesterday’s New York close, with some pressure building as we approach the US open.

    What’s driving it: The continued strength in US real yields is weighing on tech valuations, evidenced by the 5bp rise to 2.18%. This is happening against a backdrop of a relatively flat 10-year yield, with the 2s10s spread at 0.43%, indicating a mild steepening. Rising real yields typically diminish the appeal of growth stocks, particularly in the tech sector, as they increase the discount rate applied to future earnings. The DXY is modestly stronger at 99.05, adding a further headwind. A possible agreement between the US and Iran, which drove markets higher overnight, remains fragile after fresh strikes.

    • CB Consumer Confidence, printing at 10:00 ET, will be key for gauging economic strength. Consensus sits slightly below the previous print at 91.9.
    • Net non-commercial positioning is crowded short at -1,420 contracts, representing the 4th percentile on a 52-week lookback. This suggests potential for a squeeze if the market catches a bid.
    • Hedge funds have been reportedly rotating out of software and into semiconductors, which could create sector-specific pressure within the Nasdaq 100.

    NY session focus: Watch the 10:00 ET Consumer Confidence print; a significant deviation from the forecast could amplify today’s move. Key levels to monitor include the intraday low of 29745.50 on the futures and the cash-session low of 26309.80. The long dollar/short Nasdaq trade is working, fueled by rising real yields. The trade at risk is the dip-buying strategy, which has been a staple of this market. The pain trade would be a surprise dovish turn from the Fed rhetoric, causing a violent short squeeze in tech.

  • Dow Jones Futures Face Headwinds Before US Open – Tuesday, 26 May

    Where we are: Dow futures are currently trading at 50916, down 208 points or 0.41% from yesterday’s close, and trading in a tight 50865-51132 range overnight. This contrasts with a positive close for the Dow cash index yesterday, which finished at 50580, up 145 points. The divergence between cash and futures suggests some profit-taking is underway after recent highs, but the broader trend remains constructive above 50,500.

    What’s driving it: The current pullback in Dow futures reflects some pre-emptive risk reduction ahead of today’s CB Consumer Confidence release at 10:00 ET. Recent modest increases in US real yields, with the 10Y TIPS at 2.18%, may be weighing on sentiment, particularly given the moderately short positioning in Dow futures. While a near-term Iran deal has reduced inflationary concerns, that story is already largely priced into the market, leaving the Dow exposed to any negative surprises in US data. The dollar is stable, with DXY at 99.05, limiting any immediate directional impetus from currency markets.

    • CB Consumer Confidence at 10:00 ET: Consensus is for a slight dip to 91.9, but a significantly weaker number could amplify the current risk-off move.
    • 10Y Real Yields: Continued upward pressure on real yields is a headwind for risk assets, especially if nominal yields remain anchored.
    • CFTC positioning: Net non-commercials are moderately short at -10,765 contracts (21st percentile). A strong rally could trigger a substantial short squeeze.

    NY session focus: The key event today is the CB Consumer Confidence release at 10:00 ET, which could set the tone for the remainder of the session. Support lies around 50800 in Dow futures, with resistance near the overnight high of 51132. Given the mixed signals from Asia and Europe—FTSE up 1.07% vs. DAX down 0.34%—the US open is likely to be choppy. The working trade has been buying the dip in compute infrastructure stocks, while the at-risk trade is chasing the rally in energy after the initial Iran deal news. The pain trade here would be a strong consumer confidence print triggering a rapid re-pricing of Fed tightening and a sharp rally in the Dow towards recent highs.

  • NY Session Tactical Brief – Monday, 25 May

    Regime: Risk-on, supported by falling VIX (16.76) and slightly rising 10Y breakevens (2.4%) despite higher real yields (2.18%).

    Today’s market themes:

    • Oil supply disruption continues as India seeks alternative sources amidst Hormuz Strait tensions.
    • USD strength muted despite higher US real yields, signaling risk appetite.
    • Crowded positioning presents squeeze potential in GBP, JPY, Copper, and Nasdaq.

    The setup: Oil-sensitive assets are reacting to headlines regarding supply disruptions, while broader market risk sentiment remains positive, weighing on the USD. Crowded shorts in JPY and GBP against a backdrop of muted dollar strength create a setup for potential squeeze. Watch US 10Y yield reaction for risk confirmation.

    Watch list (native time per event):

    • 08:30 ET US Durable Goods Orders (forecast vs prior)
    • 10:00 ET US New Home Sales (forecast vs prior)
    • 11:00 ET US Dallas Fed Manufacturing Index (forecast vs prior)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed rhetoric on inflation / US data resilience / rising real yields
      • Cross: Global risk appetite / JPY and GBP strength potential
      • Levels: Support 118.80, Resistance 119.50
    • EUR/USD:
      • Direction: Neutral
      • Domestic (EU): ECB caution / Eurozone inflation watch / German yields
      • Cross: DXY weakness / US-DE 10Y narrowing / risk-on flow
      • Levels: Support 1.1620, Resistance 1.1670
    • GBP/USD (Cable):
      • Direction: Bullish
      • Domestic (UK): BoE on hold / softer inflation / Gilt yield stability
      • Cross: DXY weakness / US-UK 10Y narrowing / risk appetite
      • Levels: Support 1.2680, Resistance 1.2750
    • USD/JPY:
      • Direction: Bearish
      • Domestic (JP): BoJ inaction / wage pressure / intervention threat
      • Cross: US 10Y flattening / DXY weakness / risk-on stability
      • Levels: Support 156.50, Resistance 157.50
    • USD/CAD (Loonie):
      • Direction: Neutral
      • Domestic (CA): BoC on hold / CPI watch / WTI correlation
      • Cross: DXY strength / US-CA 10Y widening
      • Levels: Support 1.3780, Resistance 1.3850
    • AUD/USD (Aussie):
      • Direction: Neutral
      • Domestic (AU): RBA on hold / commodity prices / cautious tone
      • Cross: DXY weakness / US-AU 10Y narrowing / China watch
      • Levels: Support 0.7070, Resistance 0.7130
    • NZD/USD (Kiwi):
      • Direction: Neutral
      • Domestic (NZ): RBNZ easing priced in / Dairy prices / subdued tone
      • Cross: DXY weakness / US-NZ 10Y narrowing / risk appetite
      • Levels: Support 0.6400, Resistance 0.6450
    • USD/CHF (Swissy):
      • Direction: Neutral
      • Domestic (CH): SNB watching / CPI stable / neutral stance
      • Cross: DXY strength / safe-haven flows / risk sentiment
      • Levels: Support 0.7770, Resistance 0.7830
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bullish
      • Domestic: Relative ECB-BoE, ECB-BoJ, BoE-BoJ policy and yields drive crosses.
      • Cross: DXY influence / overall risk sentiment / correlation dynamics
      • Levels: Monitor respective supports/resistances closely on cross charts
    • XAU (Gold):
      • Direction: Bullish
      • Domestic (asset-specific): Real yields stabilizing / Breakevens rising / Safe haven demand
      • Cross: DXY weakness / risk appetite
      • Levels: Support $4540, Resistance $4570
    • XAG (Silver):
      • Direction: Neutral
      • Domestic (asset-specific): Industrial demand / Gold-Silver ratio watch
      • Cross: DXY weakness / risk appetite
      • Levels: Support $TBD, Resistance $TBD
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): EIA Inventory impact / OPEC / geopolitical premium
      • Cross: DXY strength / risk aversion from supply shock
      • Levels: Support WTI $110.50, Resistance WTI $113.50
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China stimulus / inventories low / supply concerns
      • Cross: Global growth proxy / DXY strength
      • Levels: Support TBD, Resistance TBD
    • SPX:
      • Direction: Neutral
      • Domestic (US): Earnings season / Fed watching / US yields stable
      • Cross: VIX regime / global backdrop
      • Levels: Futures support 5290, resistance 5320
    • NDX:
      • Direction: Neutral
      • Domestic (US): Mega-cap performance / real yields / AI momentum
      • Cross: Rates sensitivity / VIX stability
      • Levels: Support TBD, Resistance TBD
    • US30 (Dow):
      • Direction: Neutral
      • Domestic (US): Industrial earnings / cyclical sentiment
      • Cross: Bond yield reaction
      • Levels: Support TBD, Resistance TBD
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling influence / Gilt yields / commodity mix
      • Cross: Global risk / US tone
      • Levels: Support TBD, Resistance TBD
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields / IFO watch / EU sentiment
      • Cross: US tech influence / DXY direction / risk tone
      • Levels: Support TBD, Resistance TBD
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY level / JGB yields / BoJ anticipation
      • Cross: US tech / risk regime
      • Levels: Support TBD, Resistance TBD
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): Funding rate / ETF flow / on-chain signals
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support TBD, Resistance TBD

    Positioning watch: Crowded shorts exist in JPY (4th percentile) and GBP (15th percentile), while crowded longs are in AUD (98th percentile), Copper (96th percentile), and Bitcoin (90th percentile). A positive surprise in UK or Japanese data could trigger a short squeeze in their respective currencies, while disappointment in China data could hurt AUD and Copper.

    The pain trade: A sustained break above 157.50 in USD/JPY, fueled by hawkish Fed commentary, would squeeze crowded JPY shorts and trigger broader risk-off flows.