Category: US

  • Dollar Flight to Quality Intact as Middle East Strains – Tuesday, 19 May

    Where we are: The Dollar index is holding firm around 119.30, consolidating gains after the recent surge fueled by geopolitical tensions and rising US yields. Overnight, the DXY saw a narrow range, oscillating between 119.15 and 119.45. This level sits well above Friday’s close, underpinned by persistent safe-haven demand and a continued bid in US Treasuries. The 2-year yield is still above 4.0%, providing a strong anchor for the Greenback.

    What’s driving it: The primary driver remains the ongoing uncertainty surrounding the conflict in the Middle East, specifically the US-Iran tensions and Gulf War fallout. This has sparked a flight to safety, with the Dollar benefiting as a traditional haven. Furthermore, the Fed’s patient hold stance, reaffirmed in the latest minutes, continues to support the Dollar as markets price in fewer rate cuts. Sticky core CPI, firm payrolls or a re-acceleration in services inflation would push the committee further out, solidifying the Dollar’s gains.

    • 10Y real yields are at 2.1%, acting as a headwind for gold and tailwind for the Dollar.
    • Net non-commercial positioning in the Dollar is at the 85th percentile, suggesting a crowded long and a potential squeeze risk on any dovish surprises.
    • Japan and China are leading the foreign government retreat from US Treasuries, adding further pressure on Asian currencies and supporting the Dollar’s strength.

    NY session focus: Watch for the Pending Home Sales release at 10:00 ET, but geopolitical headlines will likely remain the dominant driver. Key levels to watch are 119.00 as initial support and 119.50 as near-term resistance on the DXY. The trade that’s working is buying dips in the Dollar against Asian currencies, particularly the Yen, given the BOJ’s continued dovish stance. The trade at risk is chasing the Dollar higher without confirmation from the bond market. The pain trade would be a swift de-escalation in the Middle East alongside a surprisingly weak US data print that reignites Fed cut expectations.

  • S&P 500 Braces for Home Sales Data – Tuesday, 19 May

    Where we are: S&P 500 futures are trading slightly lower, around 5295, as the European session progresses. The index is consolidating after last week’s rally to record highs, trading within a tight overnight range of 5288-5302. Resistance sits at the all-time high of 5325, with initial support around 5270, a level that held well during the early European session.

    What’s driving it: The near-term direction for the S&P 500 hinges on the US interest rate outlook, particularly as inflation concerns linger despite a strong equity market. Rising US real yields, currently at 2.1%, are putting pressure on risk assets and providing a headwind for gold. Affirming the full-year outlook from Home Depot is welcome news stateside, though this hasn’t translated into broader risk-on sentiment as Wall Street frets over a potential correction. The move in yields is the key thing to watch.

    • US 10-year yields rose 12bp yesterday to 4.59%, reflecting persistent inflation worries and hawkish Fed expectations.
    • Pending Home Sales data at 10:00 ET today could offer clues about the strength of the US housing market and overall economic activity. A weaker-than-expected print (forecast 1.0% m/m vs previous 1.5%) could prompt a dovish repricing.
    • Net non-commercial positioning in S&P 500 futures is modestly short (-138,905 contracts), suggesting limited immediate squeeze risk, although a strong upside surprise could see this positioning reverse quickly.

    NY session focus: Today’s US Pending Home Sales data at 10:00 ET will be a key focus for gauging the near-term economic outlook. Watch for a break above 5305 to trigger a test of the all-time high at 5325, while a break below 5270 could open the way to 5250. The market will also be closely watching Nvidia’s earnings report tomorrow. The trade that’s working is fading rallies in AI infrastructure names. The trade that’s at risk is chasing momentum in large-cap tech. The pain trade for the S&P 500 is a strong home sales number combined with hawkish Fed rhetoric, triggering a sharp bond sell-off and equity reversal.

  • Nasdaq 100 Under Pressure as Yields Climb – Tuesday, 19 May

    Where we are: Nasdaq 100 futures are trading around 19,350, down roughly 0.6% pre-market, continuing the slide from yesterday’s close. The index is testing the lower end of its recent range, as higher yields and ongoing concerns about the sustainability of the AI-driven rally weigh on sentiment. This level is notably below the prior NY close, suggesting continued selling pressure as we approach the US open.

    What’s driving it: The primary driver is the continued rise in US Treasury yields, with the 10-year at 4.59% and the 2-year at 4.09%, reflecting persistent inflation concerns. Real yields are also climbing (10Y TIPS at 2.1%), which is a headwind for risk assets generally and the Nasdaq 100 in particular. While the 10-year breakeven rate is slightly lower, the overall yield environment is putting pressure on growth stocks, especially those reliant on future earnings projections. The AI theme, while still dominant, is facing scrutiny, as some structural questions are being raised about its sustainability, contributing to the current pullback.

    • The 2s10s spread has widened to 0.54%, indicating a slight steepening of the yield curve and suggesting some increased confidence in economic growth, though the overall level remains relatively flat and keeps recession risk in focus.
    • Speculator positioning in Nasdaq 100 futures is crowded short (-15,985 contracts), creating a squeeze risk if positive news emerges.
    • WTI crude is trading above $101, reinforcing inflationary concerns and likely contributing to upward pressure on yields.

    NY session focus: Traders should watch the 10:00 ET release of Pending Home Sales data, though the medium-impact nature of this release suggests the focus will remain on yields and broader risk sentiment. Key levels to watch are 19,200 on the downside and 19,500 on the upside. The trade that has been working is shorting AI infrastructure names, but this is becoming a crowded trade. The trade at risk is holding onto long positions in growth stocks, especially if yields continue to rise. The pain trade for the Nasdaq 100 would be a surprise dovish shift in Fed rhetoric or a significant pullback in yields, triggering a short squeeze and a rapid rebound.

  • Dow Jones Bulls Wary as Yields Climb – Tuesday, 19 May

    Where we are: Dow futures are currently trading around 39,950, slightly lower on the session. We’ve seen a choppy overnight session, with a range between 39,900 and 40,020. This level sits below Friday’s New York close, indicating some initial weakness heading into the cash open. Key support remains around 39,800, a level to watch closely.

    What’s driving it: Rising US Treasury yields are weighing on risk sentiment this morning, triggering a rotation out of high-flying tech names and impacting the broader Dow. The US 10-year yield climbed 12bp on Friday to 4.59%, driven by persistent inflation concerns reflected in the stubbornly high 10Y Real Yield (TIPS) at 2.1%. This rise in real yields is putting pressure on equities, particularly those sensitive to discount rates, and acting as a headwind for gold. The delay in the Iran situation, mentioned in the wires, is providing only temporary relief, overshadowed by the domestic macro picture.

    • The 2s10s spread continues to widen, currently at 0.54%, up 4bp on Friday, suggesting the market is pricing in a potentially more hawkish Fed stance.
    • VIX has risen to 18.43, a 6.78% increase on Friday, reflecting increased market unease and hedging activity.
    • Speculative positioning in Dow futures remains moderately short, with net non-commercial positions at -3,562 contracts. While not extreme, the recent increase in short positions (+2,885 w/w) could exacerbate any downside move.

    NY session focus: Keep an eye on the 10:00 ET Pending Home Sales release, though the market’s focus will likely remain on yield action. A stronger-than-expected print could exacerbate yield pressures and weigh further on the Dow. Key levels to watch are 39,800 as immediate support and 40,050 as resistance. The relative underperformance of AI infrastructure names like Nvidia, Tesla, and Meta is a significant risk. The trade that’s working is shorting momentum tech names into strength. The pain trade for the Dow would be a surprise dovish shift in Fed rhetoric that sends yields sharply lower.

  • NY Session Tactical Brief – Monday, 18 May

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

    Today’s market themes:

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

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

    Watch list (native time per event):

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

    Bias by asset:

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

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

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

  • Dollar Struggles to Find Footing Amidst Yield Volatility – Monday, 18 May

    Where we are: The Dollar Index (DXY) is currently trading around 118.05, marginally higher after oscillating in a tight range overnight. Key technical levels to watch are 117.80 as support and 118.30 as resistance. The DXY remains near levels last seen in early May but is struggling to gain significant traction above that recent high.

    What’s driving it: The primary driver is the uncertainty surrounding the Fed’s future policy path. Despite the dot plot indicating two cuts in 2026, the market remains unconvinced, particularly with sticky core CPI and firm payroll data. This uncertainty is being reflected in the volatility of US Treasury yields, with the 2-year yield at 4% and the 10-year at 4.47%. Rising oil prices are adding further pressure to global inflation, complicating the Fed’s task of balancing inflation control with economic growth.

    • The Fed’s reaffirmed data-dependent stance provides little clarity, making each data release a potential market mover.
    • Rising 10-year real yields (currently at 2%) are providing a headwind for gold and a tailwind for the dollar, but the effect is muted.
    • Speculator positioning remains crowded long in the dollar (+3,187 contracts, 85th percentile), increasing the risk of a squeeze if upcoming data disappoints.

    NY session focus: The market will closely watch bond-market activity, with some analysts predicting a peak in Treasury yields near 5%, a level that could trigger a risk-on rally in stocks and bonds. Keep an eye on the 2s10s spread, currently at 0.5%, for clues about the market’s growth expectations. The trade that’s working is riding the yield curve steepening, but that’s at risk if inflation data surprises to the upside. The pain trade for the dollar is a dovish pivot from the Fed, fueled by a significant slowdown in the labor market and a sharp drop in inflation.

  • S&P 500 Under Pressure as Yields and Oil Climb – Monday, 18 May

    Where we are: S&P 500 futures are currently trading around 5285, down roughly 0.5% from Friday’s close. The overnight range has been relatively tight, but the downside bias is evident, reflecting concerns about rising yields and energy prices. We’re seeing some profit-taking after last week’s gains, particularly after the late pullback as the week ended.

    What’s driving it: Rising US Treasury yields are the primary headwind for equities this morning, fueled by persistent inflation concerns and elevated oil prices. The 10-year Treasury yield is sitting at 4.47%, up 1bp on the day, and the 10Y real yield is a notable headwind, climbing to 2.0%. The market’s pricing in a prolonged period of restrictive monetary policy, and the “higher for longer” narrative is gaining traction, even as traders have discounted near-term Fed cuts. This yield dynamic, coupled with concerns about Middle East tensions and their impact on energy supply, is dampening risk appetite. The market impact of Nvidia earnings on Wednesday is also creating some wariness.

    • US 10Y Real Yield at 2.0%, putting pressure on gold and risk assets.
    • WTI Crude trading above $101, adding to inflationary pressures.
    • The net non-commercial positioning in S&P 500 futures remains modestly short, suggesting limited room for a significant short squeeze, but is off recent lows, so the window is closing.

    NY session focus: The main focus today will be on how the market absorbs the higher yield environment. Watch the 2s10s spread, currently at +0.5%, for signs of further steepening, which could provide some relief for risk assets. Keep an eye on the 08:30 ET data dump. Key levels to watch are 5275 (support) and 5300 (resistance). The trade that’s at risk is chasing AI infrastructure names higher ahead of Nvidia earnings on Wednesday. The pain trade would be a sharp reversal in yields if incoming data weakens significantly, sparking a renewed rally in growth stocks, although this looks unlikely given the current macro backdrop.

  • Nasdaq 100 Faces Pressure as Yields Climb – Monday, 18 May

    Where we are: Nasdaq 100 futures are currently trading around 18,250, extending losses from last week’s pullback. The index is holding above the overnight low of 18,200 but remains well below Friday’s NY close of 18,350. This recent weakness follows a period of record highs, suggesting some profit-taking and a shift in risk sentiment. Traders are watching the 18,000 level as key support.

    What’s driving it: Rising US Treasury yields are weighing on the Nasdaq 100, as the 2-year yield sits at 4% and the 10-year at 4.47%. The real yield on 10-year TIPS, now at 2%, is adding further pressure, particularly on growth stocks, as it raises the discount rate applied to future earnings. While the Fed remains on hold, the market is pricing in a prolonged period of restrictive rates, spurred in part by geopolitical tensions and their impact on energy prices and inflation expectations. The net-short positioning may also be a factor, suggesting that any positive surprise could trigger a short squeeze, but for now, the pressure is downward.

    • US 10Y real yield at 2% continues to pressure tech valuations.
    • WTI crude at $101.56, fueled by US-Iran tensions, maintains inflationary pressures.
    • Nasdaq 100 net non-commercial positioning is crowded short at the 0th percentile, raising squeeze risk on any bullish surprise.

    NY session focus: All eyes will be on Nvidia earnings after Wednesday’s close, but before that, the near-term focus is on risk sentiment and how the market absorbs the rise in yields. Watch for the 10:00 ET release of the NAHB Housing Market Index for further insight into the health of the US economy. Key levels to watch are 18,200 as initial support and 18,400 as immediate resistance. The trade that’s working is shorting rallies, while the trade at risk is chasing the downside given the crowded short positioning. The pain trade would be a dovish surprise on the Nvidia earnings call triggering a violent short squeeze.

  • Dow Jones Under Pressure as Yields and Oil Climb – Monday, 18 May

    Where we are: Dow futures are currently trading around 39,850, slipping further into the red after an overnight range of 39,980-40,120. This puts the Dow on track to open lower than Friday’s New York close, continuing the late-week pullback. Resistance sits at 40,200, while initial support lies around 39,700.

    What’s driving it: Rising US Treasury yields and elevated oil prices are weighing on the Dow, mirroring the broader risk-off sentiment. The 10-year Treasury yield sits at 4.47%, its continued climb is putting pressure on equities, especially with the 2-year/10-year spread widening to 0.5%. Adding to the bearish backdrop is the elevated level of WTI crude at $101.56 a barrel, fuelling inflation concerns. There is no fresh US catalyst today.

    • The US 10-year real yield (TIPS) at 2% remains a headwind for risk assets, as higher real rates typically weigh on equity valuations.
    • The VIX, while down to 17.26, is not low enough to suggest complacency, and a spike higher could trigger further equity selling.
    • Speculator positioning in Dow Jones futures is moderately short, suggesting limited squeeze potential, but also a degree of bearish conviction.

    NY session focus: Focus will remain on Treasury yields and oil price action, with traders watching for any indication of a reversal. Keep an eye on the 10-year yield; a break above 4.50% could accelerate the Dow’s decline. Nvidia’s earnings after Wednesday’s close will be a key event for sentiment, potentially providing some support if results are strong. The trade that’s working is shorting rallies in the Dow. The trade at risk is buying the dip, as macroeconomic headwinds persist. The pain trade is a surprise dovish pivot from the Fed, sending yields lower and equities sharply higher.

  • NY Session Tactical Brief – Friday, 15 May

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

    Today’s market themes:

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

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

    Watch list (native time per event):

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

    Bias by asset:

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

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

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

  • Dollar Set for Best Week Since March – Friday, 15 May

    Where we are: The DXY currently trades around 99.00, near the upper end of its overnight range. This marks a significant move higher from yesterday’s New York close, and puts the Dollar on track for its best weekly performance since March. Key resistance lies at the 99.20 level, a break of which could trigger further upside.

    What’s driving it: Mounting inflationary pressures in the US are solidifying expectations for a potential Fed rate hike later this year. Even though the Fed has maintained a patient hold, reaffirming its data-dependent stance, the market is reacting to sticky inflation data and resilient consumer demand. The recent wholesale and consumer price data fueled these hawkish expectations. Hawkish overnight comments from Fed officials Barr and Bowman added conviction to the view that balance sheet shrinking is no longer the main priority.

    • The US 2Y yield closed at 3.98% on Tuesday, down 2bp on the day.
    • The dollar index is on track to post a weekly gain of more than 1%.
    • CFTC data shows net non-commercial positions in the US Dollar are at +693 contracts, near the 83rd percentile of their 52-week range. This crowded long positioning raises the risk of a squeeze on any dovish surprises.

    NY session focus: All eyes will be on any further commentary emerging from the high-level talks between President Trump and Chinese President Xi Jinping. We are watching for any explicit mention of the Dollar or trade disputes. Key levels to watch are 99.20 on the upside and 98.75 on the downside. The trade that’s working is fading dips in the dollar, given the strong momentum. The risk lies in a surprise dovish turn from the Fed, despite recent data. The pain trade is a sharp reversal in the DXY towards 98.00 if the market misinterprets the data.

  • S&P 500 Futures Tumble as Tech Trade Cools – Friday, 15 May

    Where we are: S&P 500 futures are trading around 5250, down roughly 1% pre-market, retreating from record highs seen in the prior session. The overnight range has been choppy, mirroring the pullback in tech. This level is significantly below yesterday’s New York close, signaling a potentially weak open.

    What’s driving it: The primary driver is a cooling off in the AI-led rally, triggering a broad risk-off move. While Fed speakers Barr and Bowman offered remarks on central banking, they haven’t provided any immediate catalyst for today’s move, leaving the focus on broader market sentiment. The recent surge in energy prices is also contributing to concerns about inflation, prompting traders to anticipate a more hawkish stance from the Fed down the line despite the two-year yield sitting at 3.98%.

    • Nvidia, Tesla, Amazon, Oracle, and Alphabet are all showing premarket weakness, down around 2%.
    • The recent strength in US economic data, particularly low jobless claims and a rise in the retail sales control group, bolsters the argument for hawkish dissenters at the Fed.
    • Speculator positioning in S&P 500 futures remains modestly short, with net non-commercial positions at -98,581 contracts, offering limited squeeze potential as this is only the 77th percentile on a 52 week basis.

    NY session focus: The market will be closely watching for further developments in the energy sector, and assessing how rising energy prices may impact broader inflation expectations. Keep an eye on the 08:30 ET data print. Key levels to watch are 5230 as initial support and 5280 as resistance. The trade that’s working is shorting overvalued tech names. The trade at risk is holding onto long positions in AI hyperscalers. The pain trade is a sharp reversal and continuation of the AI-led rally, squeezing shorts and punishing those who missed the initial move.

  • Nasdaq 100 Faces AI Reality Check – Friday, 15 May

    Where we are: Nasdaq 100 futures are trading around 19,650, down roughly 1.6% premarket, after a fresh record close in the prior session. The overnight range has been relatively contained, but the bias is clearly lower as the exuberance around AI names cools somewhat. Resistance looms above at the all-time high near 19,900.

    What’s driving it: The primary driver is a pullback in tech and AI-related stocks after their recent surge to new highs. This profit-taking is being exacerbated by concerns over persistent inflation and the potential for a more hawkish Fed, with solid economic data seemingly emboldening dissenters. While Fed speakers Barr and Bowman spoke last night, their remarks on central banking and the future of banking seem to have had little immediate market impact beyond a brief flattening of the curve. The US 2Y yield is currently at 3.98%, down 2bp yesterday, but the broader narrative of rates staying higher for longer is weighing on sentiment.

    • Tech giants like Nvidia, Tesla, Amazon, Oracle, and Alphabet are all down around 2% premarket, leading the Nasdaq lower.
    • Speculator positioning in the Nasdaq 100 is modestly long, with net non-commercial positions at +1,221 contracts. While the weekly change shows an increase of +3,543 contracts, this is still only at the 2nd percentile, meaning that despite the recent rally, there is little risk of a violent squeeze to the upside.
    • Energy prices and Boeing’s disappointing China order figures are also contributing to the risk-off tone.

    NY session focus: Keep an eye on the open and the initial reaction to the overnight moves. Watch for bargain hunters if we test down towards 19,500. The 08:30 ET data print will be key; a stronger-than-expected number will likely reinforce hawkish Fed bets and pressure the Nasdaq further. If the AI trade really falters, we could see a deeper correction towards 19,300. The trade that’s working is shorting over-extended tech names; the trade at risk is dip-buying without confirmation. The pain trade for the Nasdaq would be a sudden reversal driven by dovish surprises.

  • Dow Jones Faces Pressure as Tech Trade Cools – Friday, 15 May

    Where we are: Dow futures are currently trading around 39,700, down roughly 0.7% from yesterday’s close. The index is retreating from recent highs, trading within a relatively narrow overnight range, but showing a clear bias to the downside. Key technical levels to watch are 39,500 as immediate support and 40,000 as overhead resistance.

    What’s driving it: The primary driver is a cooling in the tech sector, triggered by profit-taking after the recent surge in AI-related stocks. While Fed speakers Barr and Bowman offered remarks on central banking, their comments lacked immediate market-moving implications; no fresh guidance was offered. The broader backdrop is one where the market remains sensitive to inflation risks and potential hawkish signals from the Fed, with the 2Y yield holding near 3.98% even after yesterday’s slight dip of 2bp. Rising energy prices are adding to the inflationary concerns and weighing on broader market sentiment.

    • S&P 500 and Nasdaq Composite closing at record highs yesterday raises the risk of a deeper correction, particularly if upcoming data points disappoint.
    • Analyst downgrades across several tech names, including Nvidia and Alphabet, are exacerbating the selling pressure.
    • Net non-commercial positioning in Dow futures is modestly short, but the +754 w/w increase suggests a possible build-up of shorts, creating some squeeze potential if sentiment shifts.

    NY session focus: Attention will be on how the US cash market opens and whether the selling pressure intensifies. Keep an eye on the 08:30 ET data releases for any surprises. The level to watch on the downside is 39,500; a break below could trigger further selling. The trade that’s currently working is shorting overvalued tech names. The trade that’s at risk is being long high-multiple stocks vulnerable to yield increases. The pain trade for the Dow would be a sudden resurgence in the AI rally, fuelled by positive economic data.

  • NY Session Tactical Brief – Thursday, 14 May

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

    Today’s market themes:

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

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

    Watch list (native time per event):

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

    Bias by asset:

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

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

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