Category: USD

  • NY Session Tactical Brief – Monday, 4 May

    Regime: Risk-off, with escalating Middle East tensions driving haven demand and weighing on equities; VIX at 16.89.

    Today’s market themes:

    • Geopolitical risk: Oil spike and risk-off sentiment due to heightened tensions in the Strait of Hormuz.
    • USD strength: Continued consolidation after recent gains, influenced by yield differentials and risk aversion.
    • ECB policy divergence: ECB hints at rate hikes clash with dovish undertones from BoJ and others.

    The setup: The spike in oil prices driven by Mideast tensions is fueling inflation fears and pressuring risk assets. Traders are pricing in a potential hawkish response from central banks, particularly the ECB, exacerbating the downside pressure on equities. Watch for further escalation in the Middle East, with a risk of a deeper equity sell-off if oil breaches $105 and 10Y yields rise further.

    Watch list (native time per event):

    • 15:30 ET CAD: BOC Gov Macklem Speaks

    Bias by asset:

    • DXY:
      • Direction: Neutral to bullish
      • Domestic (US): Fed on hold / Yield consolidation
      • Cross: Safe-haven flows / Global risk aversion
      • Levels: Support 118.50 / Resistance 119.00
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): ECB rate hike expectation / slow growth
      • Cross: DXY strength / Risk-off flows
      • Levels: 1.1650 / 1.1750
    • GBP/USD (Cable):
      • Direction: Neutral to bearish
      • Domestic (UK): BoE cautious / Data dependent
      • Cross: DXY strength / risk aversion
      • Levels: 1.3550 / 1.3650
    • USD/JPY:
      • Direction: Bullish, but with intervention risk
      • Domestic (JP): BoJ dovish / Yield curve control
      • Cross: US 10Y strength / Risk-off buying USD
      • Levels: 157.00 / 158.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC cautious / WTI boost limited
      • Cross: DXY strength / US growth advantage
      • Levels: 1.3650 / 1.3700
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA dovish / Rate cut odds rise
      • Cross: DXY strength / China weakness / Risk-off
      • Levels: 0.7150 / 0.7250
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ dovish stance continues
      • Cross: DXY strength / Risk aversion
      • Levels: 0.5850 / 0.5950
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB easing / Yield disadvantage
      • Cross: Safe-haven unwind / DXY strength
      • Levels: 0.7800 / 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral, Neutral, Bullish
      • Domestic: Relative CB stance + yields
      • Cross: DXY / Risk / cross-of-crosses dynamics
      • Levels: 0.8500-0.8600 / 170.00-171.00 / 192.00-193.00
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields / Reduced haven demand
      • Cross: DXY strength / Risk-off waning
      • Levels: 4500 / 4550
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Industrial demand lackluster
      • Cross: DXY strength / Risk-off waning
      • Levels: Lower toward 47
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Hormuz disruption / OPEC restraint
      • Cross: DXY influence / Risk regime
      • Levels: 100 / 105
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China stimulus needs affirmation
      • Cross: Global growth proxy / DXY
      • Levels: $5.00 / $5.10
    • SPX:
      • Direction: Bearish
      • Domestic (US): Earnings worries / Fed on hold / Rising yields
      • Cross: VIX spike / Geopolitical tension
      • Levels: 5100 / 5150
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yields / Mega-cap scrutiny
      • Cross: Rate sensitivity / VIX
      • Levels: 18250 / 18400
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical concerns / Bond sell-off
      • Cross: Bond-yield impact
      • Levels: 38500 / 39000
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling level / Gilt impact
      • Cross: Global risk / US tone
      • Levels: 10300 / 10400
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Bund pressure / EU outlook dimmed
      • Cross: US tech spillover / DXY
      • Levels: 23800 / 24200
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY rebound limiting gains
      • Cross: US tech / Risk regime
      • Levels: 59000 / 60000
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flow stalling / Funding rate high
      • Cross: DXY impact / Risk regime
      • Levels: $79000 / $81000

    Positioning watch: Dollar, Aussie, Copper and Bitcoin are crowded longs and vulnerable to disappointment; Yen, Kiwi, and Nasdaq are crowded shorts and vulnerable to squeezes. Watch for correlated reversals if headlines shift.

    The pain trade: A de-escalation of Middle East tensions, combined with surprisingly dovish comments from Macklem at 15:30 ET, could trigger a rapid unwinding of oil longs and a short squeeze in risk assets, particularly Nasdaq.

  • Dollar Consolidates Gains as Fed Patience Remains Key – Monday, 4 May

    Where we are: The DXY is trading around 118.75, consolidating overnight gains, following a period of sideways movement. This is slightly above Friday’s close. Key levels to watch are 119.00 as resistance and 118.50 as immediate support. The market appears to be waiting for fresh catalysts before committing to a direction.

    What’s driving it: The dollar’s strength is primarily underpinned by the Federal Reserve’s patient stance. The FOMC reaffirmed its data-dependent approach at the last meeting in March, with the dot plot signalling only two potential rate cuts in 2026. Rising oil prices and escalating tensions in the Strait of Hormuz are also contributing to the Greenback’s appeal as a safe haven. Meanwhile, Barclays recently joined the camp expecting no Fed rate cuts this year, reinforcing the higher-for-longer narrative that favors the dollar.

    • US 10Y real yields continue to fall, now at 1.94%, providing a tailwind for gold and indirectly supporting the dollar through inflation fears.
    • Speculator positioning in the dollar remains crowded long, at the 92nd percentile, increasing the risk of a sharp squeeze if data disappoints.
    • The 2s10s spread is at 0.51%, indicating a mildly positive yield curve, reflecting cautious optimism about the US economic outlook.

    NY session focus: All eyes will be on incoming US economic data, especially leading into the May 7th Fed meeting. Today, traders will be eyeing any further developments regarding Middle East tensions, which could impact risk sentiment. The 08:30 ET data print will be critical for intraday direction. The trade that’s working right now is fading risk rallies in G10, buying USD dips. The trade at risk is shorting USD into sticky inflation. The pain trade for the dollar is a surprisingly dovish tilt from the Fed combined with a significant de-escalation in geopolitical tensions.

  • NY Session Tactical Brief – Friday, 1 May

    Regime: Mixed — VIX is elevated at 18.81, while US 10Y yields are up 6bp on the day, suggesting a grind higher driven by real-rate repricing.

    Today’s market themes:

    • Real-rate repricing: higher yields pressuring risk assets amid sticky inflation data
    • USD/JPY intervention risk: markets remain on high alert after suspected BOJ action yesterday
    • ISM Manufacturing: US data in focus to confirm or deny disinflation narrative

    The setup: With US 10Y yields at 4.42%, the market is testing the upper end of its recent range. The trade is to fade risk assets on rallies, especially tech, given the real-yield headwinds. The risk is a dovish surprise from ISM data, which could lead to a relief rally.

    Watch list (native time per event):

    • 10:00 ET USD: ISM Manufacturing PMI (forecast 53.1, prior 52.7)
    • 10:00 ET USD: ISM Manufacturing Prices (forecast 80.0, prior 78.3)

    Bias by asset:

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

    • DXY:
      • Direction: Bullish
      • Domestic (US): Strong US yields, data dependent Fed
      • Cross: Risk aversion, hawkish repricing
      • Levels: Resistance at 119.00, support at 118.50
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): ECB dovish pivot, sovereign risk
      • Cross: DXY strength, rising US-DE 10Y spread, risk-off flows
      • Levels: Resistance at 1.1750, support at 1.1700
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE relatively hawkish, but growth concerns linger
      • Cross: DXY strength offsets UK yield support
      • Levels: Resistance at 1.3650, support at 1.3580
    • USD/JPY:
      • Direction: Bullish, but cautious
      • Domestic (JP): BoJ still dovish, intervention risk limits upside
      • Cross: US 10Y strength trumps intervention fears
      • Levels: Resistance at 157.00, support at 156.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC cautious, oil link provides limited support
      • Cross: DXY strength, widening US-CA 10Y yield differential
      • Levels: Resistance at 1.3650, support at 1.3580
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA hold weighs, commodity prices mixed
      • Cross: DXY strength, China growth concerns
      • Levels: Resistance at 0.6550, support at 0.6500
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength, risk-off sentiment
      • Levels: Resistance at 0.5950, support at 0.5900
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB easing supports USD/CHF
      • Cross: DXY strength, safe-haven flows
      • Levels: Resistance at 0.7850, support at 0.7750
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish
      • Domestic: ECB dovish vs BoE hawkish, BoJ dovish drives JPY weakness
      • Cross: Risk-off hurts EUR/GBP, risk supports JPY crosses
      • Levels: EUR/GBP: 0.8550-0.8600, EUR/JPY: 170.00-171.00, GBP/JPY: 192.00-193.00
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields undermine gold
      • Cross: DXY strength adds to downward pressure
      • Levels: Resistance at $4,620, support at $4,580
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Industrial demand stable, Gold-Silver ratio favoring Gold
      • Cross: DXY strength, risk-off sentiment
      • Levels: Resistance at $45, support at $44
    • WTI / Brent:
      • Direction: Neutral
      • Domestic (asset-specific): Supply concerns offset by demand worries
      • Cross: DXY strength, risk-off sentiment
      • Levels: WTI: Resistance at $106, support at $104
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth uncertain, LME stocks rising
      • Cross: DXY strength, global growth slowdown
      • Levels: Resistance at $4.50, support at $4.40
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising yields pressure valuations
      • Cross: Elevated VIX, global uncertainty
      • Levels: Futures level 5,290, cash support 5,250, resistance 5,320
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yield impact on valuations, earnings priced in
      • Cross: Rates sensitivity, VIX spike
      • Levels: Resistance at 18,100, support at 18,000
    • US30 (Dow):
      • Direction: Neutral
      • Domestic (US): Industrial and financial earnings mixed
      • Cross: Bond-yield sensitive, could lag
      • Levels: Resistance at 38,900, support at 38,700
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling weakness cushions downside
      • Cross: Global risk-off, US negative lead
      • Levels: Resistance at 10,350, support at 10,300
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Bund yields up, EU growth concerns
      • Cross: US tech weakness, DXY strength
      • Levels: Resistance at 24,500, support at 24,300
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY strength weighs, BOJ stance limits upside
      • Cross: US tech direction, risk sentiment
      • Levels: Resistance at 59,600, support at 59,300
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): Funding rates high, ETF inflows slowing
      • Cross: DXY strength, risk-off sentiment, Nasdaq correlation
      • Levels: Resistance at $61,500, support at $60,000

    Positioning watch: USD, AUD, Copper, and Bitcoin are all crowded longs above the 80th percentile, indicating significant squeeze risk on any negative surprises. JPY and NZD remain crowded shorts, susceptible to a squeeze if data improves or the BOJ hints at tightening.

    The pain trade: A soft ISM print would trigger a relief rally in risk assets, squeezing crowded USD longs and benefiting JPY/NZD shorts.

  • Dollar Strength Primed for Manufacturing Data – Friday, 1 May

    Where we are: The Dollar Index is hovering around 118.73, little changed from yesterday’s close, within an overnight range of 118.65 and 118.80. The index remains underpinned by solid US yields, with the 2-year at 3.92% and the 10-year at 4.42%. Technically, the DXY is holding above its 50-day moving average, suggesting a bias for further gains, but faces stiff resistance at the 119.00 level.

    What’s driving it: Dollar strength is primarily driven by the market’s continued belief in a patient Fed, despite growing dissent within the committee as highlighted by CNBC reports of members disagreeing with hinting at future cuts. The Treasury yields remain firm, as investors digest recent GDP and inflation data, with the 10-year real yield climbing to 1.96%, providing additional support to the dollar and acting as a headwind for gold. The crowded long positioning in the dollar leaves it vulnerable to a squeeze on any dovish surprises.

    • The Fed’s data-dependent stance, reaffirmed at the last meeting, keeps the market focused on incoming economic data.
    • US 10-year real yields are rising, reaching 1.96%, bolstering the dollar’s appeal.
    • CFTC data shows net non-commercial positions are at the 94th percentile, highlighting the risk of a short squeeze if data disappoints.

    NY session focus: All eyes are on today’s ISM Manufacturing PMI and ISM Manufacturing Prices data at 10:00 ET. A stronger-than-expected print, particularly on the prices component (forecast 80.0 vs. previous 78.3), would likely fuel further dollar strength, targeting the 119.00 level and potentially triggering a squeeze on existing USD shorts. Conversely, a weaker-than-expected report would challenge the Fed’s patient hold narrative, pushing the DXY back towards 118.00. The trade that’s working is long USD vs. EUR, but the trade at risk is long USD vs. JPY given recent intervention risks. The pain trade is a significant dovish surprise from the data triggering a sharp dollar sell-off.

  • NY Session Tactical Brief – Thursday, 30 April

    Regime: Risk-on, fueled by dovish central bank pivots and a weaker DXY (98.33), as global yields decline.

    Today’s market themes:

    • Dovish repricing of global central bank outlooks, with focus on BoE and ECB.
    • USD weakness amplified by potential intervention risks in USD/JPY, testing multi-decade highs.
    • Geopolitical tensions (US-Iran) continue to underpin commodities volatility.

    The setup: Markets are positioned for lower rates globally, but BoE and ECB decisions are crucial. The trade is to fade USD strength on any hawkish surprises. Risks include stronger US data or escalation of geopolitical tensions. US 10Y at 4.389% and DXY at 98.33 are key levels.

    Watch list (native time per event):

    • 08:30 ET CAD: GDP m/m (forecast 0.2%, prior 0.1%)
    • 12:00 BST GBP: BoE Monetary Policy Report
    • 14:15 CET EUR: Main Refinancing Rate (forecast 2.15%, prior 2.15%)

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): Fed on hold, focusing on inflation; data-dependent bias.
      • Cross: Dovish global CB pivots weighing; intervention watch impacting.
      • Levels: Support at 98.00, resistance at 98.75.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): ECB likely dovish, but watchful of inflation and fragmentation.
      • Cross: Weaker DXY, supporting; focus on US-DE 10Y spread widening.
      • Levels: Support at 1.1650, resistance at 1.1720.
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE holds steady; focus on inflation persistence.
      • Cross: DXY softness helps; US-UK 10Y spread still favoring USD.
      • Levels: Support at 1.3450, resistance at 1.3550.
    • USD/JPY:
      • Direction: Down
      • Domestic (JP): Intervention risk elevated; BoJ still dovish.
      • Cross: US 10Y dropping; risk aversion flows boosting JPY.
      • Levels: Support at 155.50, resistance at 157.50.
    • USD/CAD (Loonie):
      • Direction: Down
      • Domestic (CA): GDP key; BoC cautious; commodity support.
      • Cross: Weaker DXY; US-CA 10Y spread compression.
      • Levels: Support at 1.3645, resistance at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness; Copper prices boosting; China growth hopes.
      • Levels: Support at 0.7100, resistance at 0.7170.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness; risk-on sentiment supporting; squeezed shorts.
      • Levels: Support at 0.5820, resistance at 0.5880.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY drop; safe-haven demand waning; yields declining.
      • Levels: Support at 0.7830, resistance at 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Down; GBP/JPY: Down.
      • Domestic: See individual currency biases for CB divergence.
      • Cross: DXY influence; risk appetite dictating flows.
      • Levels: Watch key support/resistance on the individual crosses.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Real yields still supportive; geopolitical bids strong.
      • Cross: Weaker DXY; safe-haven demand persisting.
      • Levels: Support at 4550, resistance at 4660.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand increasing; Gold-Silver ratio still elevated.
      • Cross: DXY weakness; risk-on tone helping.
      • Levels: Support at 7150, resistance at 7450.
    • WTI / Brent:
      • Direction: Neutral
      • Domestic (asset-specific): Supply concerns remain; EIA inventories in focus.
      • Cross: DXY influence; geopolitical risk premium embedded.
      • Levels: WTI support at 103.00, resistance at 106.00.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China growth hopes remain; LME stocks watched.
      • Cross: Global growth proxy; DXY weakness aiding.
      • Levels: Support at 590, resistance at 605.
    • SPX:
      • Direction: Up
      • Domestic (US): Earnings positive; Fed on hold supporting.
      • Cross: VIX subdued; global risk appetite constructive.
      • Levels: Futures support at 7130, resistance at 7220.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap earnings driving gains; real yields remain low.
      • Cross: Rates sensitivity still relevant; VIX relatively calm.
      • Levels: Support at 27200, resistance at 27700.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Cyclical earnings holding up; financial sector performing.
      • Cross: Bond-yield reaction contained; risk-on flowing through.
      • Levels: Support at 48700, resistance at 49500.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk appetite boosting; US tone constructive.
      • Levels: Support at 22100, resistance at 22500.
    • DAX:
      • Direction: Up
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech strength helpful; DXY weighing less; risk regime strong.
      • Levels: Support at 23700, resistance at 24200.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech providing support; risk appetite generally good.
      • Levels: Support at 58900, resistance at 59500.
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flows stable; funding rates watched.
      • Cross: DXY weakness supporting; Nasdaq correlation remains intact.
      • Levels: Support at 75000, resistance at 77000.

    Positioning watch: JPY remains the most crowded short (0%ile), making it vulnerable to a squeeze on any hawkish BoJ surprise or intervention. Copper, AUD and Bitcoin also hold crowded long positions (>80th percentile), making them vulnerable to sharp selloffs on weaker China data, stronger DXY or a risk-off event.

    The pain trade: A hawkish BoE or ECB surprise would trigger a violent short squeeze in USD/JPY and a broader risk-off move, hammering crowded longs in AUD, Copper and Bitcoin.

  • DXY Under Pressure as Yields Dip – Thursday, 30 April

    Where we are: The DXY is currently trading at 98.33, down 0.39% on the day, with an intraday range of 98.07-98.97. This is a clear break lower from yesterday’s close around 98.73, and the DXY is testing the bottom of its recent range. The overnight weakness in US yields is weighing on the Greenback.

    What’s driving it: Dollar weakness is primarily driven by the overnight dip in US Treasury yields, with the 10-year currently at 4.389%. The market appears to be positioning ahead of today’s 08:30 ET data dump, particularly Advance GDP, Core PCE, and the Employment Cost Index, all of which will inform the outlook for Fed policy. While the Fed reaffirmed its data-dependent stance at its March meeting, with the dot plot pointing to two cuts in 2026, the recent hawkish tilt has diminished rate-cut expectations and even brought a rate hike in 2027 into play. Geopolitical tensions, previously a source of Dollar support, have eased somewhat, reducing safe-haven demand.

    • US 2-year yield is down 3.5 bps to 3.900%, signaling a slight easing of near-term rate expectations.
    • Speculator positioning in the Dollar is crowded long, at the 94th percentile, increasing the risk of a squeeze on any data disappointments.
    • The 10-year breakeven inflation rate is relatively stable at 2.46%, suggesting inflation expectations are not currently driving the yield move.

    NY session focus: All eyes are on the 08:30 ET data deluge. A strong GDP print above 2.2% coupled with a firm Employment Cost Index above 0.8% would likely trigger a Dollar bounce, targeting a retest of the 99.00 level. Conversely, weaker-than-expected figures could see the DXY test the 98.00 level and potentially break lower, triggering a squeeze on crowded longs. The trade that’s working right now is short Dollar against risk-on currencies, but this is at risk if the data surprises to the upside. The pain trade for the Dollar is a sustained rally driven by hotter-than-expected inflation data, forcing the market to fully price in a 2027 rate hike.

  • NY Session Tactical Brief – Wednesday, 29 April

    Regime: Mixed, as lower European equity indices and higher Brent prices offset positive sentiment from Bitcoin and US tech futures; VIX at 18.02.

    Today’s market themes:

    • BoC policy decision and press conference: Expect hawkish guidance from Macklem as inflation remains stubbornly high.
    • Hormuz Strait disruption fears support Oil: Geopolitical risks weigh as Brent hits one-month highs near $109/bbl.
    • USD awaits Fed decision: Dollar consolidating gains ahead of anticipated steady rates.

    The setup: Oil supply fears are currently the dominant driver, pushing Brent to $109. Focus now shifts to how the Fed will address these commodity price pressures at its upcoming meeting, particularly given continued indications that USD is “crowded long”. Rate decision + Powell presser could spur volatility. Watch for a DXY breakout if Powell speaks hawkishly or a sharp reversal if the Fed pivots dovishly on the recent inflation data.

    Watch list (native time per event):

    • 11:30 AEST AUD CPI m/m (forecast 1.3%, prior 0.0%)
    • 09:45 ET CAD BOC Rate Statement (forecast 2.25%, prior 2.25%)
    • 14:00 ET USD Federal Funds Rate (forecast 3.75%, prior 3.75%)

    Bias by asset:

    • DXY:
      • Direction: Neutral, awaiting Fed guidance.
      • Domestic (US): Fed policy decision, US data releases, US yield curve.
      • Cross: Risk sentiment, FX cross flows ahead of tech earnings.
      • Levels: Support 98.40, resistance 98.80.
    • EUR/USD:
      • Direction: Bearish, pressured by DXY strength.
      • Domestic (EU): Sticky Spanish inflation / peripheral spreads.
      • Cross: DXY strength, US-DE 10Y spread favoring USD, risk aversion.
      • Levels: Support 1.1690, resistance 1.1730.
    • GBP/USD (Cable):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, US-UK 10Y spread, risk-off flows.
      • Levels: Support 1.3490, resistance 1.3530.
    • USD/JPY:
      • Direction: Bullish, eyeing 160.
      • Domestic (JP): BoJ dovishness, intervention risk, JGB yields.
      • Cross: Rising US 10Y yield, DXY strength, risk-on flows.
      • Levels: Support 159.50, resistance 160.00.
    • USD/CAD (Loonie):
      • Direction: Neutral.
      • Domestic (CA): Hawkish BoC needed to push higher.
      • Cross: DXY strength, US-CA 10Y spread.
      • Levels: Support 1.3670, resistance 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish, after mixed CPI data.
      • Domestic (AU): Mixed CPI response, RBA watch.
      • Cross: DXY strength, US-AU 10Y spread, China growth concerns.
      • Levels: Support 0.7150, resistance 0.7200.
    • NZD/USD (Kiwi):
      • Direction: Bearish, pressed by the RBNZ’s easing bias.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, US-NZ 10Y spread, risk-off flows.
      • Levels: Support 0.5850, resistance 0.5900.
    • USD/CHF (Swissy):
      • Direction: Bullish, supported by the SNB’s easing bias.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, safe-haven outflows from CHF.
      • Levels: Support 0.7880, resistance 0.7910.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral.
      • Domestic: Relative BoE and ECB stance, relative yields.
      • Cross: DXY strength, risk sentiment.
      • Levels: Monitor key support and resistance.
    • XAU (Gold):
      • Direction: Bearish, pressured by real yields.
      • Domestic (asset-specific): Rising real yields pressuring gold.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 4550, resistance 4630.
    • XAG (Silver):
      • Direction: Bearish, impacted by industrial demand.
      • Domestic (asset-specific): Demand mixed and impacted by real yields.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 7180, resistance 7380.
    • WTI / Brent:
      • Direction: Bullish, supply disruption fears.
      • Domestic (asset-specific): Geopolitical factors driving surge.
      • Cross: Weaker DXY could add fuel to rally, risk on.
      • Levels: WTI support 100.00, Brent support 105.00.
    • Copper:
      • Direction: Neutral, but China key.
      • Domestic (asset-specific): Eyes on China growth, LME stock levels.
      • Cross: Global growth sentiment.
      • Levels: Support 595, resistance 603.
    • SPX:
      • Direction: Sideways, waiting on Fed and earnings.
      • Domestic (US): Eyes on earnings and Fed stance.
      • Cross: VIX regime, global macro.
      • Levels: Futures support 7160, resistance 7190.
    • NDX:
      • Direction: Neutral, focused on mega-cap earnings.
      • Domestic (US): Earnings and AI optimism.
      • Cross: Rates sensitive, watching VIX.
      • Levels: Support 27190, resistance 27320.
    • US30 (Dow):
      • Direction: Neutral, industrials in focus.
      • Domestic (US): Earnings focus and overall US data.
      • Cross: Bond yield reaction.
      • Levels: Support 49200, resistance 49420.
    • UK100 (FTSE):
      • Direction: Bearish, underperforming on Sterling strength.
      • Domestic (UK): Sterling and Gilt yields.
      • Cross: Global sentiment.
      • Levels: Support 22280, resistance 22450.
    • DAX:
      • Direction: Bearish, dragged by German yields.
      • Domestic (DE): German yields and data.
      • Cross: US tech and risk.
      • Levels: Support 23900, resistance 24100.
    • Nikkei:
      • Direction: Bearish, after BoJ inaction.
      • Domestic (JP): JPY levels and JGB yields.
      • Cross: US tech, risk.
      • Levels: Support 59700, resistance 60650.
    • BTC:
      • Direction: Bullish, trending higher.
      • Domestic (asset-specific): ETF flows supportive.
      • Cross: Risk-on environment.
      • Levels: Support 76000, resistance 78000.

    Positioning watch: USD and AUD are crowded longs, while JPY and NZD are crowded shorts. A dovish Fed surprise or positive Japanese data could trigger significant short squeezes in the JPY and NZD.

    The pain trade: A dovish hold from the Fed, coupled with commentary suggesting openness to rate cuts later this year, would trigger a sharp DXY sell-off and a rally in risk assets, catching crowded USD longs off guard.

  • DXY Sees Safe-Haven Bid; Fed Watch in Focus – Wednesday, 29 April

    Where we are: The Dollar Index is currently trading at 98.61, up +0.19% on the session. Overnight, the DXY has traded in a tight 98.41-98.63 range, consolidating gains after yesterday’s risk-off move. Current levels are holding above last week’s close but the market is in wait-and-see mode ahead of the Fed.

    What’s driving it: The dollar is catching a bid on safe-haven flows as risk sentiment sours, with stocks falling and oil rising amid persistent inflation worries. Domestically, all eyes are on the Fed’s decision and statement due at 14:00 ET, as well as Chair Powell’s press conference at 14:30 ET. The market broadly expects the Fed to hold rates steady in the 4.25-4.50% range, but the focus is on forward guidance and any hints about the timing of potential rate cuts given the still-sticky inflation picture.

    • US 10Y Real Yields have been rising to 1.91%, which traditionally acts as a headwind for gold.
    • The US 2Y yield is up 3.3bp on the day to 3.879, signaling a potential re-think on the Fed’s rate cut trajectory.
    • Speculator positioning in the Dollar Index is crowded long, at the 94th percentile, raising the risk of a sharp squeeze lower if the Fed strikes a more dovish tone than anticipated.

    NY session focus: Traders are squarely focused on the Fed events at 14:00 ET and 14:30 ET, with any deviation from the expected hold potentially triggering significant volatility. Key levels to watch are 98.40 as intraday support and 98.80 as resistance. The flattening 2s10s curve suggests the market is bracing for a potential policy mistake. The working trade is to fade any initial hawkish reaction to the Fed, given the crowded long positioning. The pain trade is a hawkish surprise that triggers a dollar squeeze and a sharp sell-off in risk assets.

  • NY Session Tactical Brief – Tuesday, 28 April

    Regime: Risk-off, as Nasdaq futures lead declines and gold tests three-week lows, driven by persistent inflation fears and higher front-end yields (US 2Y +3.5bp).

    Today’s market themes:

    • OPEC+ uncertainty: UAE exit sparks oil supply concerns, boosting crude prices.
    • BOJ disappointment: Yen weakens as BOJ holds policy, defying hawkish expectations.
    • Australian Inflation: RBA to watch closely.

    The setup: Market participants are repricing for potentially persistent inflation with focus on the Fed and data dependency. Rising yields and a stronger USD are weighing on risk assets. Front-end US yields are climbing, driving DXY higher (98.58) and pressuring equities. Watch for follow-through in NY session, especially tech given the Nasdaq’s underperformance.

    Watch list (native time per event):

    • 10:00 ET USD: CB Consumer Confidence (forecast 89.0, prior 91.8)
    • 11:30 AEST AUD: CPI y/y (forecast 4.8%, prior 3.7%)
    • 12:30 NZT NZD: RBNZ Gov Breman Speaks

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Fed likely to maintain hawkish stance given sticky inflation.
      • Cross: Risk-off sentiment and rising yields support demand.
      • Levels: Resistance at 98.75, support at 98.25.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and widening US-DE 10Y spread pressure pair.
      • Levels: Resistance at 1.1725, support at 1.1675.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and widening US-UK 10Y spread weighs on Cable.
      • Levels: Resistance at 1.3540, support at 1.3460.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ holds steady, reinforcing dovish stance. Intervention risk remains.
      • Cross: US 10Y yield rise widens US-JP yield differential.
      • Levels: Resistance at 159.80, support at 158.95.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and US-CA 10Y spread support pair.
      • Levels: Resistance at 1.3680, support at 1.3610.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): CPI data likely to inform RBA stance on rates.
      • Cross: DXY strength, China growth concerns weigh.
      • Levels: Resistance at 0.7195, support at 0.7150.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ Gov Breman speaks; further easing priced in.
      • Cross: DXY strength and risk-off sentiment pressure Kiwi.
      • Levels: Resistance at 0.5920, support at 0.5865.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and safe-haven unwinding support pair.
      • Levels: Resistance at 0.7910, support at 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY bearish, GBP/JPY bearish.
      • Domestic: BoJ dovishness supports GBP/JPY.
      • Cross: DXY strength impacts all crosses; risk-off benefits JPY.
      • Levels: Watch key support/resistance levels.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields weigh on gold.
      • Cross: DXY strength further pressures gold.
      • Levels: Resistance at 4600, support at 4565.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Industrial demand concerns add to pressure.
      • Cross: DXY strength and risk-off sentiment drag silver lower.
      • Levels: Resistance at 7250, support at 7200.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): UAE withdrawal from OPEC creates supply uncertainty.
      • Cross: Risk-off sentiment could limit upside despite supply concerns.
      • Levels: WTI resistance at $102, Brent resistance at $106.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns weigh on demand.
      • Cross: DXY strength adds to downward pressure.
      • Levels: Resistance at 600, support at 593.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Rising yields and mixed earnings reports weigh.
      • Cross: VIX trending higher; risk-off mood dominates.
      • Levels: Futures resistance at 7225, cash support at 7145.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Higher real yields and mixed earnings data weighs heavy.
      • Cross: Sensitive to increased rates and hawkish Fed stance.
      • Levels: Resistance at 27500, support at 27000.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): No clear catalyst — sensitive to overall market tone.
      • Cross: Resilient reaction to bond-yield movement in last session.
      • Levels: Resistance at 49500, support at 49300.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Sterling weakness and global factors dominate.
      • Cross: Reacting sharply to global risk-off.
      • Levels: Resistance at 22500, support at 22400.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Cautious outlook from ECB surveys.
      • Cross: Risk-off and tech weakness weigh on DAX.
      • Levels: Resistance at 24150, support at 23900.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): BoJ inaction pressures Nikkei.
      • Cross: Risk regime compounds effects on the downside.
      • Levels: Resistance at 60600, support at 59700.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Negative sentiment, ETF outflows.
      • Cross: Correlations with Nasdaq and risk assets weighing.
      • Levels: Resistance at 77500, support at 76000.

    Positioning watch: The crowded JPY short (0th percentile) is vulnerable to a squeeze on any surprise shift in BoJ policy or hawkish rhetoric. AUD and Bitcoin long positions (>85th percentile) are also at risk of a correction given the current risk-off environment.

    The pain trade: A dovish surprise from the Fed, reversing the yield spike and triggering a short squeeze in JPY, would inflict maximum pain on crowded short positions and boost risk assets.

  • Dollar Firms as Yields Creep Higher – Tuesday, 28 April

    Where we are: The DXY is currently trading at 98.58, up 0.30% on the day, having tested a high of 98.72. This represents a near three-week high for the index, exceeding yesterday’s close. The move is occurring amid a broad risk-off tone in futures, setting up for a potentially interesting NY session.

    What’s driving it: The dollar’s strength is primarily driven by a recalibration in US yields, particularly at the front end, with the 2Y yield trading at 3.848, up 3.5bp on the day. This move reflects persistent inflation concerns fuelled by rising oil prices and uncertainty surrounding Iran’s plans for the Strait of Hormuz, pushing back expectations for Fed easing. The crowded long positioning in the USD also means any hawkish shift or risk-off bid can trigger outsized moves as shorts cover, which is likely contributing to the current dynamic.

    • US 2Y yield up 3.5bp to 3.848 indicates a front-end driven repricing of rate expectations.
    • CFTC data shows a crowded long USD position (94th percentile), increasing squeeze risk.
    • Rising oil prices, with WTI Crude at $91.06, are contributing to inflationary concerns and supporting the dollar.

    NY session focus: Today’s session will be dominated by the 10:00 ET release of CB Consumer Confidence, with a forecast of 89.0 versus a previous 91.8. A weaker-than-expected print could trigger a temporary pullback in the dollar, though the underlying support from yields should limit the downside. A stronger print will likely fuel further gains, targeting the 99.00 level in the DXY. Keep a close watch on risk sentiment as well, with S&P 500 futures trading down almost 0.6%; sustained risk aversion will provide additional tailwinds for the greenback. The pain trade for the dollar is a surprise dovish signal from a Fed official that forces a re-think of near-term rate expectations.

  • NY Session Tactical Brief – Monday, 27 April

    Today’s market themes:

    • Iran tensions easing: potential peace proposal buoying risk assets, weighing on oil.
    • BOJ hold: yen weakness continues post-policy announcement.
    • Crowded positioning: squeeze risk in USD, JPY, AUD, BTC, and Copper.

    The setup: The market is pricing in reduced geopolitical risk following reports of a potential peace proposal from Iran, triggering a risk-on move. Expect continued USD weakness and commodity pullback near-term. Watch for a breakout above 216.00 in GBP/JPY to confirm bullish momentum. US 10Y at 4.323%.

    Watch list (London time):

    • 13:30 [Medium] USD: CB Consumer Confidence (forecast 97.0, prior 98.7)
    • 15:00 [Low] US: Richmond Manufacturing Index (forecast -5, prior -11)
    • Any BOJ speaker comments regarding future policy adjustments.

    Bias by asset:

    • DXY: Down, risk-on sentiment and unwinding of crowded longs, target 97.80.
    • EUR: Up, weaker dollar and wider US-DE 10Y spread (+130bp), target 1.1800.
    • GBP: Up, risk-on and slightly narrower US-UK 10Y (-63bp), targeting 1.3600.
    • JPY: Down, BOJ inaction fuels yen weakness; US-JP 10Y at +185bp.
    • CAD: Up, weaker dollar, supported by WTI strength.
    • AUD: Up, driven by energy prices and weaker USD.
    • NZD: Up, benefiting from risk-on sentiment, supported by reports of easing tensions.
    • CHF: Down, weaker dollar as DXY falls and risk appetite returns.
    • EUR/GBP, EUR/JPY, GBP/JPY: Neutral, watching cross currents of risk and individual currency drivers.
    • XAU (Gold): Neutral, real yields stable but safe haven demand ebbing.
    • XAG (Silver): Neutral, trading lower with gold; keep an eye on the gold/silver ratio.
    • WTI / Brent: Mixed, Iran headlines offset bullish drivers; watch for $98 WTI break.
    • Copper: Down, concerns over China’s growth trajectory.
    • SPX: Up, supported by risk-on sentiment, targeting 7220.
    • NDX: Up, benefiting from lower rates and mega-cap momentum.
    • US30: Neutral, mixed picture; impacted by rising oil costs and potential peace.
    • UK100: Neutral, struggling due to strength in GBP and commodity sector drag.
    • DAX: Up, driven by easing tensions regarding Iran.
    • Nikkei: Up, technology sector strength and yen weakness persist.
    • BTC: Down, risk-off sentiment in crypto; crowded longs suggest downside risk.

    Positioning watch: CFTC data reveals crowded longs in USD, AUD, Copper, and Bitcoin, increasing squeeze risk on any negative news. JPY and NZD are crowded shorts, vulnerable to positive surprises.

    The pain trade: A surprise hawkish signal from a Fed speaker would crush risk assets, triggering a scramble to cover USD shorts and unwind equity longs.

  • Dollar Under Pressure as US-Iran Talks Eyed – Monday, 27 April

    Where we are: The DXY currently trades at 98.14, down 0.28 after an overnight range of 98.03-98.48. The Greenback is underperforming against most G10 currencies as risk sentiment improves slightly ahead of the New York open. This puts the index well below Friday’s close, continuing the downward trend.

    What’s driving it: The primary driver appears to be renewed optimism surrounding potential US-Iran talks, as highlighted by wire reports. This is weighing on the safe-haven demand for the Dollar. The US 10Y yield is currently at 4.323%, up slightly from its overnight low, but this isn’t providing sufficient support to offset the geopolitical developments. Speculator positioning remains crowded long in the USD, at the 94th percentile, increasing the risk of a squeeze if risk-on sentiment persists.

    • Reuters: “Dollar steady as traders eye US-Iran talks, central banks”
    • Falling US 10Y Real Yield (TIPS): 1.92% is a gold tailwind
    • CFTC data shows speculators are net long USD, at the 94th percentile (52-week), and down -187 contracts w/w.

    NY session focus: With no major US data releases scheduled before the New York open, the focus will remain on developments surrounding US-Iran negotiations. Any signs of progress could trigger a further decline in the Dollar. Watch for a break below the 98.00 level on the DXY; if it breaks this could trigger a sharper move lower given the crowded long positioning. The trade that’s working right now is short USD against risk-on currencies. The trade that’s at risk is long USD and safe-haven currencies. The pain trade for the Dollar is a swift resolution of US-Iran tensions.

  • NY Session Tactical Brief – Saturday, 25 April

    Today’s market themes:

    • Iran talks: Shifting expectations for US-Iran negotiations drives swings in oil and risk sentiment.
    • Dollar weakness: Broad USD selling pressure continues, impacting FX crosses and commodity prices.
    • Tech rebound: Nasdaq leading equities higher, fueled by a rotation back into growth and mega-cap stocks.

    The setup: Equities are bid into the NY open on hopes for Iran deal progress, weighing on crude and USD. Look for pullbacks in oil to be bought if Trump’s stance softens, and USD dip-buying at 98.15 DXY. US 10Y at 4.302% offers resistance.

    Watch list (London time):

    • 17:00 USD: President Trump Speaks (Medium)
    • No other scheduled events
    • No Central Bank Speakers

    Bias by asset:

    • DXY: Down – Iran talks pressure, target 98.00.
    • EUR: Up – Weak USD, US-DE 10Y spread +131bp supports.
    • GBP: Up – Sentiment improved, US-UK 10Y spread -61bp.
    • JPY: Down – Risk-on flows overshadow US-JP 10Y +187bp.
    • CAD: Up – Weaker USD and oil price sensitivity at 1.3650.
    • AUD: Up – Risk appetite lifts, eyeing 0.7200.
    • NZD: Up – Dollar weakness main driver, 0.5900 target.
    • CHF: Down – Risk-on offsets safe-haven demand; watch 0.7800.
    • EUR/GBP, EUR/JPY, GBP/JPY: Mixed – Play risk sentiment and individual drivers.
    • XAU (Gold): Up – Real yields falling, target 4775.
    • XAG (Silver): Up – Following Gold, watch Gold/Silver ratio.
    • WTI / Brent: Down – Iran talk hopes weighing, choppy around $94/$105.
    • Copper: Neutral – Modest China demand concerns; hold 600.
    • SPX: Up – Risk-on, 7250 potential on break of 7200.
    • NDX: Up – Rates ease, mega-caps lead, new highs possible.
    • US30: Neutral – Lagging tech, focus on economic data later in the week.
    • UK100: Down – Underperforming EU peers, still heavy tone.
    • DAX: Neutral – Holding steady, weak tech hampering.
    • Nikkei: Up – Catching up to US tech move, watch 60000.
    • BTC: Neutral – Consolidation near highs, risk-on/off correlation still relevant.

    Positioning watch: CFTC data shows crowded longs in USD, AUD, Copper, and Bitcoin, and crowded shorts in JPY and NZD — any hawkish comments from the Fed or negative trade news could trigger violent short squeezes in JPY/NZD.

    The pain trade: A complete breakdown of US-Iran talks and renewed Hormuz tensions would spike oil, send the dollar higher, and crush risk assets.

  • DXY Under Pressure as Rate Cut Bets Return – Saturday, 25 April

    Where we are: The DXY is currently trading at 98.36, down 0.31% on the session and near the low end of its intraday range of 98.32-98.75. This represents a notable shift from the previous New York close, and the dollar index has given up a good portion of its weekly gains. The move lower is being mirrored in the US Treasury market, where both the 2-year and 10-year yields are sharply lower, with the 2-year at 3.785% and the 10-year at 4.302%.

    What’s driving it: The primary driver appears to be a reassessment of the Fed’s rate path, fueled by reports of potential progress in US-Iran talks and an extension of the ceasefire in Lebanon. This is easing geopolitical concerns related to oil supply and inflationary pressures, leading traders to price in a higher probability of rate cuts later in the year. Also Warsh possibly stepping into the position as Fed chair. The crowded long positioning in the dollar, as evidenced by the 94th percentile net non-commercial positioning, amplifies the downside risk should these narratives gain further traction.

    • “Don’t count on rate cuts just yet: Warsh as Fed chair may not lead to big policy changes” – AP News.
    • US 2Y Yield: 3.785% (-0.059, -1.53%) intraday decline indicates a significant shift in near-term rate expectations.
    • Net non-commercial USD positioning at 94th percentile suggests a potential squeeze scenario if the bullish narrative falters.

    NY session focus: Traders will be closely monitoring risk sentiment. Further positive developments in the Middle East could exacerbate the dollar’s decline. Key levels to watch on the downside are the 98.00 and 97.50 marks on the DXY. Keep an eye on S&P 500 futures at 7194.75 and Nasdaq futures at 27435.00 as leading indicators. The trade that’s working is short USD vs. risk assets. The trade at risk is long USD based on geopolitical tensions. Trump’s speech at 17:00 London could introduce further volatility, particularly regarding ceasefire details. The pain trade here is a sudden reversal in risk sentiment, sending the crowded dollar longs scrambling to cover.

  • Asset Summary – Friday, 24 April

    Asset Summary – Friday, 24 April

    US DOLLAR experienced a mixed trading session, initially rising before retracing some gains. Optimism surrounding potential progress in US-Iran negotiations, indicated by reports of upcoming talks in Islamabad, and the extension of the ceasefire in Lebanon, weighed on the dollar. However, earlier in the week the dollar saw gains. The ongoing impasse in US-Iran relations and the vulnerability of the Strait of Hormuz are contributing to upward pressure on oil prices. This is fueling inflation concerns which are causing investors to re-evaluate the future path of interest rates. The Federal Reserve is expected to hold steady on interest rates in the upcoming meeting, with expectations of no further adjustments for the rest of the year.

    BRITISH POUND is gaining value as positive developments in US-Iran negotiations ease geopolitical risk, and strong domestic factors fuel upward momentum. Rising inflation expectations among UK businesses, alongside better-than-anticipated retail sales figures, are strengthening the case for the Bank of England to raise interest rates. The combined effect of these factors suggests a potential for further appreciation of the pound, supported by both external and internal economic forces.

    EURO is experiencing upward pressure, recovering from recent lows, primarily driven by speculation regarding potential advancements in US-Iran negotiations. Optimism surrounding these talks, fueled by reports of a possible breakthrough, is contributing to the euro’s renewed strength. Looking ahead, the upcoming ECB policy meeting will be crucial, as the central bank evaluates economic data, geopolitical tensions in the Middle East, and their potential impact on future monetary policy. While the ECB remains cautious, market expectations are building for future interest rate hikes, suggesting confidence in the Eurozone’s economic outlook in the medium term.

    JAPANESE YEN faces continued downward pressure as it approaches a key psychological level against the US dollar. Despite verbal warnings of intervention by Japanese authorities and a recent uptick in core inflation, the currency is weakening, driven by rising energy costs and the broader uncertainty stemming from geopolitical tensions in the Middle East. The Bank of Japan is expected to maintain its current monetary policy stance, further contributing to the yen’s vulnerability, particularly as Japan relies heavily on imported energy and is susceptible to inflationary pressures from global events.

    CANADIAN DOLLAR is gaining value, as evidenced by the recent decline in the USD/CAD exchange rate. This indicates that it now takes fewer Canadian dollars to purchase one US dollar compared to the previous trading day. Further bolstering this observation, the Canadian dollar has appreciated against the US dollar over both the past month and the past year, signaling a sustained strengthening trend.

    AUSTRALIAN DOLLAR faces downward pressure as global risk sentiment deteriorates due to ongoing Middle East tensions, impacting Asian equities and boosting demand for the US dollar as a safe haven. Concerns about energy supply disruptions further contribute to this negative outlook. However, the potential for an interest rate hike by the Reserve Bank of Australia, driven by a strong labor market and inflation, limits potential losses. Furthermore, a forthcoming economic security agreement between Japan and Australia, encompassing key commodities, offers some support to the currency’s value. Upcoming inflation data will be crucial in shaping future policy expectations and influencing the Australian Dollar’s trajectory.

    DOW JONES is likely to experience mixed influences. While positive earnings reports, particularly from companies like P&G, could provide upward momentum, the stagnation in US-Iran negotiations and the resulting surge in energy prices might act as a counterweight. The flat performance of Dow futures suggests a cautious outlook, indicating that gains may be limited compared to indices more heavily weighted towards the technology sector, which is currently benefiting from strong AI-related earnings. Therefore, the Dow Jones’s performance may be less pronounced than that of the S&P 500 or Nasdaq.

    FTSE 100 faces downward pressure amid geopolitical tensions surrounding US-Iran talks and the Strait of Hormuz, impacting sectors like banks, defence, pharma, and mining. Mondi’s cautionary outlook on rising costs further contributes to the negative sentiment. While positive retail sales data offers some support, concerns raised by a Bank of England policymaker about potential market corrections due to economic slowdown, private credit stress, and AI-driven repricing add to the overall bearish outlook, resulting in a weekly decline for the index. Energy and consumer stocks may offer some resilience due to higher oil prices.

    DAX is facing downward pressure due to geopolitical uncertainties stemming from stalled US-Iran peace talks and ongoing disruptions in the Hormuz Strait. President Trump’s extension of the Lebanon-Israel truce provides temporary relief, but oil price volatility persists. The mixed earnings season is also impacting the index, with weakness in aerospace and defense contrasting with strength in technology. Specific company performance, such as declines in MTU Aero Engines and Airbus, weigh on the index, while SAP’s positive results provide some support. Corporate restructuring plans from Bayer and shareholder scrutiny for Merck add to the market’s cautious sentiment, contributing to the index’s weekly decline.

    NIKKEI experienced a notable surge, reaching a new record high as investors reacted to recent inflation data and looked ahead to the Bank of Japan’s upcoming policy meeting. The rise in core inflation, although still under the central bank’s target, contributed to market sentiment. Anticipation is that interest rates will remain stable amidst global uncertainties, particularly those stemming from the Middle East and their impact on energy prices. Technology stocks played a significant role in the index’s gain, demonstrating strength across several key companies. Overall, the index showed positive weekly performance, contrasting with the broader Topix index.

    GOLD’s price is experiencing volatility influenced by geopolitical developments and macroeconomic factors. Tentative hopes for progress in US-Iran negotiations offer some upward pressure, with potential breakthroughs cited in Pakistani government sources; however, skepticism remains due to limited progress in prior talks and President Trump’s cautious stance. Counteracting this upward pressure, gold is on track for a weekly decline as peace negotiations have stalled. Furthermore, the closure of the Strait of Hormuz is contributing to higher energy prices, exacerbating inflation concerns and raising the likelihood of interest rate hikes, which negatively impact the appeal of gold as a non-yielding asset. Consequently, the outlook for gold is uncertain, dependent on the interplay between these conflicting factors.

    OIL experienced a downturn, retreating to $94.8 a barrel, ending a series of gains as optimism surrounding potential US-Iran diplomatic progress surfaced. The possibility of a negotiated resolution, potentially facilitated by Pakistan, injected uncertainty into the market. While prices dipped, oil is still poised for a substantial weekly increase of approximately 14%, indicating underlying market strength. US policy, specifically the ongoing naval blockade of Iranian ports, continues to significantly impact the global supply, maintaining pressure despite diplomatic overtures. Furthermore, activity involving sanctioned Iranian oil tankers near the Strait of Hormuz emphasizes persistent geopolitical risks that can influence supply chains and prices.