Category: USD

  • 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.

  • 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.

  • 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.

  • Dollar Grinds Higher as Warsh Era Begins – Thursday, 14 May

    Where we are: The dollar index is trading near 118.15 in early New York trading, consolidating gains after a firmer overnight session. The DXY continues to benefit from the hawkish repricing, hovering near its highest levels since last week. Key resistance remains at 118.50, with support around 117.80, roughly where it closed yesterday in New York.

    What’s driving it: The confirmation of Kevin Warsh as Fed Chair is the primary driver, stoking expectations for a more aggressive stance on inflation. The market is now fully pricing out any Fed rate cuts this year, and increasingly pricing in a rate hike, fueling the bid for the Greenback. The rise in US 2Y yields to 4% and 10Y yields to 4.46% continues to support the dollar, especially with real yields on TIPS pushing higher to 1.99%, adding pressure to gold. The Trump-Xi summit is adding a layer of uncertainty, but so far the market is focused on the domestic inflation picture and the Fed’s likely response.

    • The 2s10s spread widened by 2bp to 0.48%, reflecting increased term premium.
    • CFTC data shows net non-commercial USD positioning at +693 contracts, but it is still in the 83rd percentile. Given how crowded that long positioning is, there is squeeze risk on any disappointment in the data.
    • The nomination of Warsh itself implies more rate hikes could be priced in, increasing support for USD

    NY session focus: The focus is squarely on the 08:30 ET Retail Sales and Unemployment Claims releases. A strong print in either will reinforce the hawkish narrative and likely push the dollar higher, potentially testing 118.50. Weaker data, however, opens the door to a squeeze on those crowded USD longs. Pay close attention to the market’s reaction to the numbers. The trade continues to be long USD vs EUR or JPY, but the risk is that this gets faded quickly on a dovish surprise. The pain trade is a surprisingly weak inflation print that sparks a rapid unwinding of hawkish Fed bets.

  • NY Session Tactical Brief – Wednesday, 13 May

    Regime: Mixed — VIX holding near 18.40 amid rising US real yields, capping risk appetite.

    Today’s market themes:

    • Real-rate repricing: Fed nomination vote and PPI data set to dictate the pace of the climb, pressuring gold and growth stocks.
    • Iran War Impact: Ongoing supply disruptions and inventory depletion boosting oil prices, triggering inventory concerns.
    • Crowded FX positions: Extreme positioning in AUD, NZD, JPY and GBP presents squeeze risks on data surprises.

    The setup: Rising real yields are the dominant force. Focus is on US PPI and the Fed nomination vote today to further define the Fed’s path. Watch for a continued bid in US yields to pressure equities and gold, with DXY bid into the European open. Key is whether 10Y TIPS break 2.00%.

    Watch list (native time per event):

    • 08:30 ET USD: Core PPI m/m (forecast 0.3%, prior 0.1%)
    • 08:30 ET USD: PPI m/m (forecast 0.5%, prior 0.5%)
    • 14:30 ET USD: Fed Chair Nomination Vote (forecast Pass, prior —)

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Strong US data supports hawkish Fed, boosting USD.
      • Cross: Risk-off flows and rising US yields underpin the dollar.
      • Levels: Support 117.80, Resistance 118.50.
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Eurozone growth concerns and relatively dovish ECB weigh on EUR.
      • Cross: Stronger USD and widening US-DE yield spread pressure EUR/USD.
      • Levels: Support 1.0760, Resistance 1.0820.
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): BoE easing expectations, pressured by persistent inflation, weigh on the Pound.
      • Cross: Stronger USD and widening US-UK yield spread pressure Cable.
      • Levels: Support 1.2460, Resistance 1.2520.
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): BoJ still dovish relative to Fed; intervention risk lingers.
      • Cross: Higher US yields drive USD/JPY higher despite intervention risks.
      • Levels: Support 157.75, Resistance 158.50.
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): WTI price volatility offsets CAD strength from BoC rate cuts.
      • Cross: USD strength and widening US-CA yield spreads favor upside.
      • Levels: Support 1.3650, Resistance 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA easing expectations and weak CPI growth weigh on AUD.
      • Cross: Stronger USD and risk-off sentiment hurt the Aussie.
      • Levels: Support 0.7175, Resistance 0.7225.
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ dovishness and concerns about domestic demand hurt the Kiwi.
      • Cross: Stronger USD and risk-off sentiment weigh on NZD/USD.
      • Levels: Support 0.5900, Resistance 0.5950.
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB intervention unlikely; Swiss yields remain low.
      • Cross: Risk-off flows less supportive with strong USD driving gains.
      • Levels: Support 0.7800, Resistance 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish
      • Domestic: Relative CB stance — BoE slightly more hawkish than ECB. BoJ lags both.
      • Cross: DXY strength benefiting JPY crosses, risk tone dictates flows.
      • Levels: EUR/GBP: 0.8510-0.8560, EUR/JPY: 169.00-170.00, GBP/JPY: 192.80-193.80
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields are a significant headwind.
      • Cross: Stronger USD and risk-off environment further pressure Gold.
      • Levels: Support $4,675, Resistance $4,725.
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Industrial demand is soft, Gold/Silver ratio rising.
      • Cross: Stronger USD and risk-off environment weigh on Silver.
      • Levels: Support $29.00, Resistance $29.50.
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): IEA reports record draw in global oil inventories due to Iran War.
      • Cross: Risk sentiment generally supportive, but DXY strength a cap.
      • Levels: WTI Support $101.00, Resistance $103.00.
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns resurface, LME stocks remain high.
      • Cross: Global growth worries and DXY strength pressure Copper.
      • Levels: Support $5.00, Resistance $5.10.
    • SPX:
      • Direction: Bearish
      • Domestic (US): Higher yields weigh on valuations, focus on earnings.
      • Cross: VIX spikes indicate potential for further downside risk.
      • Levels: Futures support 5200, resistance 5250 (cash: key levels to use).
    • NDX:
      • Direction: Bearish
      • Domestic (US): Mega-cap tech vulnerable to higher real yields.
      • Cross: High rate sensitivity amplifies downside in risk-off environment.
      • Levels: Support 19,500, Resistance 19,700.
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical sector earnings sensitive to rising yields.
      • Cross: Bond yield reaction to data key driver of Dow performance.
      • Levels: Support 39,000, Resistance 39,500.
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling strength offsetting positive global risk sentiment.
      • Cross: Global risk appetite supports, but US tone a key determinant.
      • Levels: Support 8350, Resistance 8400.
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields stable; focus on EU sentiment indicators.
      • Cross: US tech performance influences DAX, DXY strength is a cap.
      • Levels: Support 24,000, Resistance 24,100.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY weakness supports, BoJ policy stance is key.
      • Cross: US tech performance and risk-on sentiment drive Nikkei.
      • Levels: Support 63,000, Resistance 63,500.
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): Funding rates remain elevated, ETF flows slowing.
      • Cross: DXY strength and risk-off sentiment hurt Bitcoin. Nasdaq correlation matters.
      • Levels: Support $62,000, Resistance $63,000.

    Positioning watch: CFTC data shows crowded longs in AUD, Copper, and Bitcoin (above 80th percentile), vulnerable to a squeeze on any downside surprises. Crowded shorts in GBP, JPY and NZD present an upside risk.

    The pain trade: A surprise dovish tilt from the Fed on the nomination vote or a much weaker-than-expected PPI print would trigger a short squeeze in crowded USD shorts and boost risk assets, especially the crowded AUD/USD longs.

  • Dollar Holds Firm Ahead of PPI Data – Wednesday, 13 May

    Where we are: The Dollar Index is currently hovering around 118.10, consolidating after its recent push to one-week highs. The overnight range has been relatively tight, and the DXY is holding above its prior New York close, underpinned by expectations of sustained higher interest rates. Key technical levels to watch include resistance at 118.30 and support around 117.80.

    What’s driving it: The dominant driver remains the anticipation of stickier-than-expected US inflation, reinforced by yesterday’s hotter-than-expected PPI print. The market is laser-focused on whether this morning’s Core PPI data, due at 08:30 ET, will confirm this trend. This narrative has seen US 2Y yields climb to 3.95% and 10Y yields to 4.42%, further supporting the Greenback. Recent hawkish interpretations of the Fed’s data-dependent stance continue to bolster the USD, pricing out near-term rate cut bets.

    • The 2s10s spread remains at 0.46%, flattening slightly, signalling the market still expects eventual easing despite current hawkishness.
    • Rising 10Y real yields, currently at 1.95%, continue to present a headwind for gold, indirectly supporting the Dollar.
    • Speculator positioning remains crowded long in USD, at the 83rd percentile, increasing the risk of a squeeze on any dovish surprise.

    NY session focus: All eyes are on the 08:30 ET Core PPI print – a beat would likely fuel further USD strength, targeting 118.50, while a miss could trigger a sharp correction toward 117.50. Also of note is the Fed Chair Nomination Vote this afternoon at 14:30 ET. The consensus is for a smooth pass for Kevin Warsh, but any unexpected drama could introduce volatility. The trade that’s working is still fading dips in USD/JPY. The pain trade for the Dollar would be a sharp drop in core inflation, forcing a rapid repricing of Fed expectations.

  • NY Session Tactical Brief – Tuesday, 12 May

    Regime: Risk-off, driven by stronger-than-expected US CPI data and escalating Middle East tensions, pushing the VIX higher and US 10Y yields up 5bp to 4.43%.

    Today’s market themes:

    • Real-rate repricing: Hotter CPI print fuels hawkish Fed bets, pressuring risk assets.
    • Geopolitical risk: Iran war uncertainty keeps oil elevated, supporting inflation concerns.
    • Crowded shorts: Potential for squeeze in JPY, GBP, and NZD if risk sentiment improves.

    The setup: The stronger-than-expected US CPI print has triggered a hawkish repricing of Fed expectations, sending US yields higher and the dollar stronger. This is pressuring risk assets, particularly tech and emerging markets. The trade is to fade rallies in risk assets, but watch for potential short squeezes in crowded short currencies if geopolitical risks abate or US data disappoints. US 10Y at 4.43%, DXY at 98.25.

    Watch list (native time per event):

    • 08:30 ET USD: Core CPI m/m (forecast 0.3%, prior 0.2%)
    • 11:59 ET USD: Fed Chair Nomination Vote (forecast Pass, prior —)
    • 11:30 AEST AUD: Wage Price Index q/q (forecast 0.8%, prior 0.8%)

    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): Hawkish Fed repricing on CPI beat. Rising US yields support.
      • Cross: Risk-off flows, safe-haven demand, EM weakness.
      • Levels: Resistance at 98.50, support at 98.00.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, widening US-DE 10Y yield spread, risk-off sentiment.
      • Levels: Resistance at 1.0800, support at 1.0750.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): Rising UK borrowing costs pressure.
      • Cross: Stronger DXY, widening US-UK 10Y yield spread, risk aversion.
      • Levels: Resistance at 1.3550, support at 1.3500.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ remains dovish. Intervention risk looming.
      • Cross: Higher US 10Y yields, strong DXY, risk-off bids into USD.
      • Levels: Resistance at 158.00, support at 157.00.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, US-CA 10Y yield spread widening.
      • Levels: Resistance at 1.3750, support at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): Awaiting Wage Price Index data.
      • Cross: Stronger DXY, US-AU 10Y yield spread widening, risk aversion.
      • Levels: Resistance at 0.7220, support at 0.7175.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ easing bias remains in place.
      • Cross: Stronger DXY, US-NZ 10Y yield spread widening, risk-off flows.
      • Levels: Resistance at 0.5960, support at 0.5920.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, waning safe-haven appeal of CHF.
      • Levels: Resistance at 0.7820, support at 0.7780.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bearish, GBP/JPY: Bearish.
      • Domestic: Relative central bank policy divergence remains key driver.
      • Cross: DXY strength supports JPY and GBP.
      • Levels: Monitor individual cross support/resistance.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields pressure gold.
      • Cross: Stronger DXY, risk-off flows less supportive with rates rising.
      • Levels: Resistance at $4,720, support at $4,680.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): No fresh catalyst — sensitive to overall risk tone.
      • Cross: Stronger DXY, risk-off sentiment, industrial demand concerns.
      • Levels: Monitor gold for direction, lower volatility.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Supply disruption fears, escalating geopolitical tensions.
      • Cross: Weaker DXY provides some support, but risk-off a headwind.
      • Levels: Watch for Iran ceasefire news.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns weigh.
      • Cross: Stronger DXY, global growth proxy suffers from risk-off sentiment.
      • Levels: Monitor China data.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Higher yields, earnings rotation away from growth.
      • Cross: Elevated VIX, global risk-off sentiment.
      • Levels: Futures at 5185. Support at 5170, resistance at 5200.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Sensitive to real yields, mega-cap earnings under pressure.
      • Cross: Rates sensitivity, VIX elevation.
      • Levels: Monitor tech stocks for price action.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Financials and industrials facing mixed earnings.
      • Cross: Bond-yield reaction muted.
      • Levels: Trading near flatline, awaiting catalyst.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Weaker Sterling, higher Gilt yields.
      • Cross: Global risk, US tone negative.
      • Levels: Trading lower in Europe.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech weakness, stronger DXY, risk aversion.
      • Levels: Trading lower on lack of drivers.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY weakness capped by intervention risk.
      • Cross: US tech selling pressure, risk off.
      • Levels: High close, vulnerable to correction.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates easing, ETF flows slowing.
      • Cross: Stronger DXY, risk aversion, Nasdaq correlation.
      • Levels: Finding soft support after overnight retreat.

    Positioning watch: CFTC data shows crowded longs in AUD, USD, Copper, and Bitcoin, creating potential downside risk if data disappoints or risk sentiment shifts. Crowded shorts in JPY, GBP, and NZD present squeeze potential if risk appetite recovers.

    The pain trade: A surprise dovish signal from the Fed Chair Nomination Vote, coupled with weaker-than-expected US data later in the week, would trigger a sharp short squeeze in JPY, GBP, and NZD, while simultaneously hammering the USD.

  • Dollar on Edge Ahead of CPI Data – Tuesday, 12 May

    Where we are: The Dollar Index (DXY) is currently hovering around 98.15, having traded in a tight overnight range of 98.00-98.25. This is slightly above Friday’s NY close. Key technical resistance lies at 98.50, with support around 97.80.

    What’s driving it: All eyes are on today’s US CPI release at 08:30 ET. The Fed’s patient hold hinges on continued disinflation, making this data pivotal. Forecasts suggest an uptick in CPI y/y to 3.7%, and a firm print would push back expectations of Fed cuts, supporting the dollar. The market is already positioned somewhat long USD, so a weak print carries squeeze risk. Recent Fed speak has been relatively quiet, though Governors Waller and Cook both spoke on Friday, but their comments were backward-looking. The recent rise in breakeven inflation, now at 2.47%, further underscores the sensitivity of the market to inflation data.

    • The market is net long USD, at the 83rd percentile (52w), increasing the probability of a squeeze if the data misses.
    • 10Y breakeven inflation rose 2bp on Monday to 2.47%, suggesting inflation expectations remain elevated.
    • The Warsh Fed Chair nomination cleared a Senate hurdle overnight, suggesting some continuity in monetary policy direction is likely, but the market’s focus is squarely on the CPI data this morning.

    NY session focus: The core event today is the 08:30 ET US CPI release. A higher-than-expected print will likely see the DXY test 98.50 resistance and potentially push towards 99.00, while a downside surprise could trigger a squeeze towards 97.50. The 11:59 ET Fed Chair Nomination Vote is largely priced in, but any unexpected issues could add volatility. The trade that’s working is fading USD rallies ahead of data releases. The at-risk trade is short USD into this CPI print. The pain trade is a substantial upside surprise on core CPI, forcing a rapid repricing of Fed expectations and a significant dollar short squeeze.

  • NY Session Tactical Brief – Monday, 11 May

    Regime: Risk-off, with oil spiking on escalating Middle East tensions and Trump rejecting Iran’s peace offer, VIX at 17.08 and 10Y yields slightly higher.

    Today’s market themes:

    • Geopolitical Risk: Middle East tensions driving oil and safe-haven flows.
    • Rate Divergence: CB policy driving FX crosses, particularly EUR/GBP and EUR/JPY.
    • Commodity Strength: Silver and Copper continue to show strong performance.

    The setup: Geopolitical tensions are escalating quickly, pushing oil higher and boosting safe-haven demand. The market is pricing in a higher risk of supply disruptions from the Middle East. Watch for further headlines as the situation develops; a break above $105 in Brent could trigger a larger risk-off move. US 10Y yield is at 4.393%.

    Watch list (native time per event):

    • 09:30 CST CNY: CPI y/y (forecast 0.9%, prior 1.0%)
    • 09:30 CST CNY: PPI y/y (forecast 1.7%, prior 0.5%)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed watching data; US yields steady
      • Cross: Geopolitical risk-off; Euro weakness capping upside
      • Levels: Support: 97.80, Resistance: 98.03
    • EUR/USD:
      • Direction: Down
      • Domestic (EU): ECB divergence widening vs BoE and Fed
      • Cross: DXY strength / US-DE 10Y spread widening / Risk-off
      • Levels: Support: 1.1749, Resistance: 1.1782
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE hawkish hold / higher Gilt yields supporting
      • Cross: DXY / US-UK 10Y spread / Risk-off offsets domestic strength
      • Levels: Support: 1.3570, Resistance: 1.3616
    • USD/JPY:
      • Direction: Up
      • Domestic (JP): BoJ dovish / JGB yields capped / Intervention watch
      • Cross: Higher US 10Y yield / DXY / risk regime
      • Levels: Support: 156.76, Resistance: 157.18
    • USD/CAD (Loonie):
      • Direction: Up
      • Domestic (CA): BoC dovish / WTI strength offset by CAD weakness
      • Cross: DXY / US-CA 10Y spread
      • Levels: Support: 1.3661, Resistance: 1.3695
    • AUD/USD (Aussie):
      • Direction: Down
      • Domestic (AU): RBA neutral / China data sensitivity
      • Cross: DXY strength / US-AU 10Y / China growth uncertainty
      • Levels: Support: 0.7220, Resistance: 0.7249
    • NZD/USD (Kiwi):
      • Direction: Down
      • Domestic (NZ): RBNZ dovish / dairy prices lackluster
      • Cross: DXY strength / US-NZ 10Y / risk-off sentiment
      • Levels: Support: 0.5939, Resistance: 0.5957
    • USD/CHF (Swissy):
      • Direction: Up
      • Domestic (CH): SNB dovish / Swiss yields low
      • Cross: DXY strength / safe-haven unwinding
      • Levels: Support: 0.7774, Resistance: 0.7795
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Down; EUR/JPY: Up; GBP/JPY: Up
      • Domestic: EUR/GBP: BoE vs ECB; EUR/JPY & GBP/JPY: rate divergence
      • Cross: DXY / risk regime / cross-of-crosses dynamics
      • Levels: EUR/GBP: 0.8647/0.8668; EUR/JPY: 184.39/185.02; GBP/JPY: 212.73/213.87
    • XAU (Gold):
      • Direction: Down
      • Domestic (asset-specific): Rising real yields / ETF outflows
      • Cross: DXY strength / risk-off demand limited
      • Levels: Support: 4655.6, Resistance: 4714.2
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand / Gold strength
      • Cross: DXY / risk regime
      • Levels: Support: 7953.000, Resistance: 8418.000
    • WTI / Brent:
      • Direction: Up
      • Domestic (asset-specific): Geopolitical risk / potential supply disruption
      • Cross: DXY / risk regime
      • Levels: WTI: Support: 96.64, Resistance: 100.35; Brent: Support: 102.90, Resistance: 105.97
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China stimulus / LME stock levels
      • Cross: DXY / global growth proxy
      • Levels: Support: 625.4000, Resistance: 641.4300
    • SPX:
      • Direction: Down
      • Domestic (US): higher yields / earnings plateau
      • Cross: VIX rising / global risk aversion
      • Levels: Futures support: 7391.00, Resistance: 7420.25, Cash support: 7398.90
    • NDX:
      • Direction: Down
      • Domestic (US): Real yields / AI bubble potential
      • Cross: Rates sensitive / Rising VIX
      • Levels: Futures support: 29227.50, Resistance: 29399.25
    • US30 (Dow):
      • Direction: Down
      • Domestic (US): Cyclical rotation out / yields impact
      • Cross: bond-yield reaction
      • Levels: Futures support: 49471, Resistance: 49706
    • UK100 (FTSE):
      • Direction: Down
      • Domestic (UK): Sterling strength / Gilt yields rising
      • Cross: global risk aversion / US tone
      • Levels: Support: 22742, Resistance: 22850
    • DAX:
      • Direction: Down
      • Domestic (DE): Lower Bund yields / weaker outlook
      • Cross: US tech weakness / DXY / risk regime
      • Levels: Support: 24204, Resistance: 24362
    • Nikkei:
      • Direction: Down
      • Domestic (JP): Strong JPY / JGB yields rising slightly
      • Cross: US tech weakness / risk regime
      • Levels: Support: 62393, Resistance: 63385
    • BTC:
      • Direction: Down
      • Domestic (asset-specific): Crowded longs / Funding rates high
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support: 62393, Resistance: 63385

    Positioning watch: AUD/USD and Bitcoin are crowded longs (96th and 83rd percentile, respectively), making them vulnerable to a squeeze lower on any disappointment or USD strength. GBP and JPY are crowded shorts, a positive surprise could trigger a squeeze higher.

    The pain trade: A surprise de-escalation in Middle East tensions combined with a dovish signal from the Fed would trigger a massive short squeeze in USD/JPY and GBP/USD, while simultaneously crushing oil prices and unwinding crowded long positions in AUD and BTC.

  • Dollar Stalls Near 98.00 as Iran Risk Persists – Monday, 11 May

    Where we are: The DXY is currently flat on the day at 97.87, holding its ground near the upper end of its intraday range of 97.80-98.03. This relative stability comes after a modest decline last week, with the index finding support around the 97.80 level. The Dollar remains bid as haven flows persist due to US-Iran tensions.

    What’s driving it: The primary driver is the continued geopolitical uncertainty surrounding US-Iran relations; President Trump dismissing Iran’s response to his peace proposal as “TOTALLY UNACCEPTABLE” keeps safe-haven demand for the Dollar elevated. Domestically, the Fed remains on a patient hold, reaffirming its data-dependent stance at the last meeting on March 19th, awaiting further confirmation of disinflation and a cooling labor market. This stance contrasts with the recent US nonfarm payrolls report in April, which significantly exceeded expectations, pushing back market expectations for rate cuts and lending support to the Greenback.

    • BofA and Goldman have pushed back Fed rate-cut expectations in response to persistent inflation risks and robust jobs data.
    • The US 10-year real yield (TIPS) sits at 1.96%, putting upward pressure on the Dollar.
    • CFTC data shows net non-commercial USD positioning at +693 contracts, in the 83rd percentile. This leaves the Dollar vulnerable to a squeeze should data disappoint or risk appetite improve markedly.

    NY session focus: With no major US data releases scheduled for today, focus will remain on geopolitical headlines and their impact on risk sentiment. Key level to watch is 98.00; a break above could trigger further upside. Conversely, a move below 97.80 could signal renewed weakness. The working trade remains buying dips on haven demand. The risk trade is a sudden de-escalation of tensions in the Middle East triggering a sharp Dollar selloff. The pain trade for the Dollar is a surprisingly soft CPI print that forces a repricing of Fed rate-cut expectations.

  • NY Session Tactical Brief – Friday, 8 May

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

    Today’s market themes:

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

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

    Watch list (native time per event):

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

    Bias by asset:

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

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

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

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

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

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

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

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

  • NY Session Tactical Brief – Thursday, 7 May

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

    Today’s market themes:

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

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

    Watch list (native time per event):

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

    Bias by asset:

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

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

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