Research
Elite Research | 18.05.2025

Elite Research | 18.05.2025

Currencies
AUD
AUD Macro Thesis | Short-Term (1–4 Weeks)

1. Domestic Inflation Trajectory Near RBA Target

  • Australian inflation measures remain within the RBA's 2–3% target band. March CPI held at +2.4% YoY, while trimmed-mean CPI was at +2.7% YoY.
  • April is expected to show stability in headline inflation (+2.4% YoY), with core trimmed-mean easing marginally to +2.6% YoY.
  • Seasonal cost increases (health insurance, holidays) are being offset by easing fuel prices and moderating housing-related inflation, reducing broad-based inflationary pressures.

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2. Labour Market Resilience Underpins Growth

  • The latest employment data surprised to the upside, with a +89k jobs gain in April and unemployment steady at 4.1%.
  • Rising participation rate (from 66.8% to 67.1%) indicates continued labour market strength.
  • Despite arguments suggesting caution, the data reflects robust domestic demand and labour absorption, keeping wage growth elevated around 3.5% YoY.

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3. RBA Policy Outlook: Cuts Still Expected, but Measured

  • The RBA is expected to cut rates next week but will likely maintain a cautious tone given persistent service sector inflation and a resilient labour market.
  • The 'measured response' narrative prevails—markets are pricing in a cut but not a rapid easing cycle, as the RBA balances growth support against sticky inflation.

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4. External Trade & Commodity Dynamics Supportive

  • Iron ore demand is holding firm due to robust non-property sector growth in China, particularly infrastructure, heavy industry, and machinery exports.
  • China's steel demand from non-property sectors has surpassed 72% of total consumption, reducing sensitivity to property sector weakness.
  • However, the easing of global trade tensions (US-China tariff truce) is dampening safe-haven demand for commodities, including gold and bulk commodities, capping upside momentum for Australia’s terms of trade.

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5. Global Risk Sentiment & USD Dynamics

  • Recent US-China tariff de-escalation is fostering a risk-on environment, beneficial for cyclical FX like AUD.
  • Nonetheless, USD remains supported by high Treasury yields and fiscal concerns, limiting broad-based AUD outperformance.
  • The ongoing reassessment of global capital allocations (US overweight unwinding) is a slow process, keeping AUD exposed to USD sentiment shifts.

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Summary Thesis

The Australian dollar’s short-term (1–4 week) macro backdrop remains fundamentally stable, underpinned by:

  • Inflation converging towards target but not collapsing,
  • A resilient labour market supporting domestic growth,
  • Steady external demand for commodities, especially from non-property Chinese sectors.

However, the bullish case is capped by:

  • The RBA’s cautious easing approach,
  • Global trade optimism reducing safe-haven flows,
  • USD strength driven by fiscal dynamics and yields.

The net bias is neutral-to-moderate positive for AUD on fundamentals, with external drivers (US data, risk sentiment) dictating near-term flows.

CAD
CAD Macro Thesis | Short-Term (1–4 Weeks)

1. Domestic Growth Remains Underwhelming

  • Canada’s economic data remains soft, with manufacturing and wholesale sales showing lackluster momentum.
  • GDP growth expectations are subdued, with fiscal headwinds and household spending under pressure.
  • Despite firmer global growth indicators, the domestic backdrop offers little catalyst for a meaningful economic rebound in the near term.

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2. Inflation Dynamics Easing Gradually

  • Canadian inflation has been moderating, though sticky service inflation keeps the Bank of Canada (BoC) cautious.
  • April’s CPI is expected to continue this disinflationary trend, with core measures likely to soften further.
  • Lower energy prices (notably crude oil) are also feeding into headline disinflation, easing cost pressures across sectors.

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3. Bank of Canada: Dovish Tilt with Delayed Action

  • Markets are now aligned with the view that BoC cuts are a matter of “when,” not “if.”
  • The lack of urgency stems from still-elevated wage growth and concerns over core inflation persistence.
  • However, with financial conditions remaining tight and growth data uninspiring, the BoC is expected to pivot dovishly by summer, though not imminently.

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4. Oil Market Pressures Add Drag

  • WTI crude prices remain under pressure due to global supply dynamics, including rising OPEC+ production and Iranian supply headlines.
  • Despite marginal gains in Canadian oil production, global oversupply risks are weighing on CAD’s terms of trade.
  • Any downside surprise in oil demand (from weaker China or global trade normalization) would amplify headwinds for CAD.

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5. USD Sensitivity & Capital Flows

  • CAD remains tethered to USD movements, with broad dollar strength driven by rising US yields and fiscal deficit concerns.
  • Any relief rally in risk assets or USD softness could benefit CAD temporarily, but fundamental capital flows remain USD-favourable.
  • Speculative positioning remains light, indicating limited scope for a strong CAD rally without external catalysts.

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Summary Thesis

The short-term macro outlook for CAD (1–4 weeks) is fundamentally neutral-to-bearish:

  • Domestic growth is soft,
  • Inflation is easing but not collapsing,
  • Oil markets are a structural drag,
  • BoC remains cautious, in no rush to cut rates aggressively.

The external USD environment continues to dictate CAD flows, with limited domestic tailwinds to support the currency independently. The path of least resistance remains a gradual drift lower unless broader USD sentiment turns.

CHF
CHF Macro Thesis | Short-Term (1–4 Weeks)

1. Domestic Inflation Softening Further

  • Swiss inflation continues to decelerate, moving further below the Swiss National Bank’s (SNB) target.
  • Persistent disinflation is being driven by subdued domestic demand, declining energy prices, and easing imported inflation pressures.
  • The services sector, traditionally more sticky, is also showing signs of moderating price pressures, reinforcing the disinflationary trend.

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2. SNB Policy Outlook: Room for Further Easing

  • With inflation undershooting targets and global central banks leaning dovish, the SNB is expected to maintain a dovish policy stance.
  • Discussions of a negative terminal rate gaining traction reflect the SNB’s willingness to ease further if necessary.
  • Intervention rhetoric remains in place, but the bar for active FX intervention is high unless CHF appreciation becomes disorderly.

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3. Capital Flows & Hedging Dynamics

  • Despite negative domestic yields, CHF demand remains firm due to global capital reallocation.
  • Real money accounts continue to buy CHF, driven by:
    • Diversification away from USD assets,
    • Increased hedge ratios amid geopolitical uncertainty.
  • This structural flow supports CHF, even as macro fundamentals argue for weakness.

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4. External Risk Sentiment & Eurozone Spillovers

  • Improving Eurozone economic sentiment, narrowing Bund spreads, and reduced peripheral risk are typically CHF-negative.
  • However, lingering geopolitical risks (e.g., Russia/Ukraine tensions, Middle East instability) keep CHF’s safe-haven appeal intact.
  • Any escalation in global risk-off events would reignite CHF buying, particularly in EURCHF.

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5. USDCHF & Broader FX Dynamics

  • Broader USD strength, underpinned by US fiscal concerns and high Treasury yields, limits aggressive CHF appreciation versus USD.
  • The speculative market remains long CHF, capping upside potential, but underlying structural flows prevent meaningful depreciation.
  • USDCHF flows see consistent RM selling interest on spikes, reinforcing a medium-term cap but lacking immediate catalysts for downside.

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Summary Thesis

The CHF macro backdrop for the next 1–4 weeks is neutral-to-mildly bearish:

  • Domestic disinflation and dovish SNB policy bias pressure CHF fundamentals.
  • However, structural flows from real money accounts, hedging adjustments, and geopolitical tensions limit downside.
  • CHF strength is more flow-driven than macro-driven, with external risk events remaining the key wildcard.

In absence of fresh risk-off catalysts, CHF is likely to remain stable to slightly weaker, especially against cyclical currencies, but USDCHF downside is limited by global USD dynamics.

EUR
EUR Macro Thesis | Short-Term (1–4 Weeks)

1. Eurozone Growth Stabilizing at Low Levels

  • Eurozone Q1 GDP growth came in at +0.4% QoQ, confirming a modest rebound after stagnation in 2023.
  • Business surveys point to a gradual improvement in activity, particularly in services, while manufacturing remains soft but stabilizing.
  • Fiscal support, easing energy prices, and normalization of trade flows post-tariff adjustments are providing a mild growth tailwind.

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2. Inflation Moderating, but Services Remain Sticky

  • Headline inflation is easing towards the ECB’s 2% target, but core inflation, especially in services, remains elevated.
  • Labour cost growth is decelerating but still high enough to keep services inflation sticky in the near term.
  • Market pricing has adjusted to reflect fewer ECB cuts, now closer to 50bps by year-end, as disinflation proves slower than anticipated.

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3. ECB Policy: Cautious Easing Expected

  • ECB officials continue to signal a June rate cut is likely, but emphasize data dependency for subsequent moves.
  • Market focus is shifting towards ECB’s September projections, where the persistence of core inflation will be key.
  • The ECB’s cautious stance supports the euro by reducing policy divergence with the Fed, especially as the latter delays cuts.

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4. Capital Flows & Diversification Benefitting EUR

  • Foreign portfolio flows into eurozone assets remain robust. February data showed strong equity inflows, and expectations are for another positive print in March.
  • The global de-dollarisation narrative is aiding EUR demand, as investors seek diversification into European assets.
  • This dynamic supports EUR structurally, even as cyclical growth lags other regions.

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5. External Environment: Trade & Risk Sentiment

  • Easing global trade tensions (US-China tariff truce) reduces external demand headwinds for the eurozone.
  • However, risks linger with the limited scope of tariff reductions and potential re-escalation.
  • Improving global risk sentiment supports cyclical EUR strength against safe havens (CHF, JPY), while EURUSD remains driven by USD factors (yields, fiscal concerns).

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Summary Thesis

The EUR macro outlook for the next 1–4 weeks is neutral-to-bullish:

  • Stabilizing growth, easing inflation (albeit sticky services), and cautious ECB easing are supportive.
  • Strong foreign inflows and global diversification trends underpin structural EUR demand.
  • While EURUSD direction remains sensitive to US data and fiscal dynamics, the EUR’s internal fundamentals point to resilience and mild upside on a relative basis.

The near-term bias is for continued EUR stability with upside risks, especially against USD and CHF, should US fiscal and rates concerns intensify.

GBP
GBP Macro Thesis | Short-Term (1–4 Weeks)

1. UK Growth Data Stronger but Likely Overstated

  • Q1 GDP surprised to the upside at +0.7% QoQ, driven by a surge in business investment (+5.9%) and front-loaded exports linked to tariff uncertainties.
  • However, underlying growth momentum is softer than the headline suggests, as much of the upside is attributed to one-off factors like transport equipment exports and statistical distortions from seasonal adjustments.
  • Year-on-year growth actually slowed to +1.3% from +1.5% in Q4 2024, highlighting the fragility beneath the surface.

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2. Inflation Moderating but Services Remain a Concern

  • Inflation has been steadily easing, with goods prices softening, but services inflation remains sticky, driven by wage growth and housing costs.
  • April CPI (due next week) is expected to show a slight acceleration due to fiscal measures, but the broader disinflation trend remains intact.
  • The BoE acknowledges risks are skewed towards disinflation but remains cautious given the persistence in services price pressures.

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3. Labour Market Weakness Emerging

  • Labour market data shows clear signs of cooling:
    • Wage growth is decelerating, though still above levels consistent with the 2% inflation target.
    • Employment is weakening, with rising inactivity and slower hiring.
  • Importantly, the latest jobs data did not indicate widespread layoffs, suggesting a gradual rather than abrupt slowdown in labour demand.

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4. BoE Policy: Dovish Bias, but June Cut Not Fully Priced

  • Markets are pricing less than 3bps for a June BoE rate cut, suggesting expectations are still fluid.
  • The BoE remains on track for a gradual easing path, preferring to deliver one 25bps cut per quarter, contingent on incoming inflation and labour data.
  • Short-term rates are likely to remain elevated relative to eurozone peers, providing some GBP support, though risk-reward favours positioning for easing.

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5. External Factors: Trade, Fiscal, and Sentiment

  • UK-EU trade negotiations have hit new friction points (e.g., fisheries, youth mobility), but their market impact is limited unless escalation occurs.
  • Sterling remains highly sensitive to global risk sentiment and USD dynamics. Broad dollar strength and high US yields act as a cap for GBPUSD upside.
  • However, the UK’s improving relative growth optics and higher front-end rates compared to Europe provide a supportive floor for GBP.

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Summary Thesis

The GBP short-term (1–4 weeks) macro outlook is neutral-to-mildly bullish:

  • Growth data is overstated but still supportive in optics.
  • Inflation is easing, though services stickiness keeps the BoE cautious.
  • Labour market softening reinforces the case for gradual easing, but GBP retains a rate differential advantage near-term.
  • External sentiment and USD dynamics remain dominant drivers, but GBP is unlikely to materially weaken absent a shift in global macro conditions.

Near-term, GBP is likely to remain range-bound with a slight upward bias, supported by residual rate differentials and improving optics, while awaiting clearer macro confirmation.

JPY
JPY Macro Thesis | Short-Term (1–4 Weeks)

1. Domestic Inflation Softening, but Services Remain Sticky

  • Japan’s core inflation continues to ease, with goods prices moderating on the back of lower import costs and energy subsidies.
  • However, services inflation remains sticky, driven by persistent wage growth pressures and cost-push factors.
  • The BoJ’s 2% inflation target is still being met on a headline basis, but underlying momentum is losing steam.

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2. BoJ Policy Normalization: Very Slow & Measured

  • The BoJ remains extremely cautious despite the March rate hike, with no urgency to further tighten policy.
  • Focus is on managing financial conditions gradually, with attention to wage dynamics and services inflation sustainability.
  • Yen weakness is a concern domestically but tolerated as long as inflation expectations remain anchored and real wage growth improves.
  • Speculation over further BoJ normalization is overstated in the near term, with the bank emphasizing a “data-dependent and slow” approach.

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3. Capital Flows & Yield Differentials Still JPY Negative

  • Japanese investors continue to seek higher yields abroad, maintaining strong outflows into foreign bonds and equities.
  • US-Japan yield spreads remain historically wide, keeping USDJPY elevated.
  • Despite recent talk of potential FX interventions, the BoJ/MoF is unlikely to intervene decisively unless yen weakness becomes disorderly and threatens financial stability.

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4. Global Risk Sentiment Providing Limited Support

  • Traditionally, JPY benefits from risk-off sentiment, but this correlation has weakened.
  • Current global trade optimism (US-China tariff truce) reduces safe-haven demand for JPY.
  • Positioning data suggests JPY shorts remain elevated, with little appetite for aggressive covering unless global risk sentiment deteriorates sharply.

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5. G7 Meetings & Policy Narrative

  • Upcoming G7 Finance Minister and Central Bank meetings are unlikely to deliver substantive outcomes for JPY.
  • Market participants are skeptical of any significant policy shifts, with JPY trading largely as a proxy for USD and global rates dynamics in the near term.
  • Flow-wise, demand for JPY is limited to speculative short-term players, with real money and corporates remaining net sellers.

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Summary Thesis

The short-term (1–4 week) macro outlook for JPY is fundamentally bearish:

  • Domestic inflation and wages support gradual BoJ normalization, but the pace is too slow to impact FX in the near term.
  • Wide US-Japan yield differentials continue to drive capital outflows.
  • Weak correlation to risk sentiment and limited policy catalysts reduce JPY’s appeal.
  • Intervention risk acts as a psychological cap but lacks teeth unless volatility spikes.

Unless there is a sharp deterioration in global sentiment or a material shift in BoJ policy tone, JPY weakness is likely to persist structurally, with rallies being sold into.

NZD
NZD Macro Thesis | Short-Term (1–4 Weeks)

1. Inflation Reaccelerating but Volatile Components Distort

  • April inflation data is showing a reacceleration, with headline CPI expected to pick up to +2.5% YoY.
  • However, the increase is largely driven by volatile components:
    • Food prices rose +0.8% MoM.
    • International airfares surged +24.8% MoM.
  • Rents inflation, a key domestic driver, continues to ease (+0.2% MoM), reflecting cooling housing pressures.

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2. Wage Growth & Labour Market Softening

  • Measures of wage growth are easing steadily from the 5.4% peak seen in 2023, with recent indicators tracking around 3.5% YoY.
  • Labour shortages are less acute, as business surveys (NZIER, ANZ) show a moderation in hiring intentions and wage expectations.
  • The slowing wage momentum reduces the urgency for further aggressive RBNZ tightening.

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3. RBNZ Policy: On Hold, Watching Global Developments

  • The RBNZ is firmly in a data-dependent stance, with no immediate need for further hikes.
  • The central bank is expected to maintain current rates through the short term, balancing domestic disinflation trends against global uncertainties.
  • Market pricing reflects a high bar for further tightening, with rate cuts likely delayed until clear evidence of a growth slowdown emerges.

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4. External Drivers: China, Commodities & USD Dynamics

  • NZD remains heavily exposed to Chinese economic performance through trade and commodity channels.
  • While China's property sector is weak, non-property steel demand and broader infrastructure spending are providing a backstop.
  • Dairy prices, a key NZ export, have edged higher in recent months, offering mild support to the terms of trade.
  • However, broad USD strength, driven by US yields and fiscal concerns, continues to cap NZD performance.

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5. Capital Flows & Sentiment

  • Foreign investor appetite for NZ assets remains muted, with limited fresh inflows into bonds or equities.
  • The global “re-risking” environment benefits cyclical FX like NZD, but positioning remains light, offering some scope for tactical rallies.
  • Geopolitical risks and global yield differentials, however, limit sustained NZD strength.

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Summary Thesis

The NZD short-term (1–4 weeks) macro outlook is neutral with mild upside bias:

  • Inflation is reaccelerating due to transitory factors but underlying pressures are easing.
  • Wage growth and labour markets are cooling, keeping RBNZ in a prolonged hold.
  • Terms of trade are stable, supported by dairy prices and non-property Chinese demand.
  • NZD’s fate remains tightly linked to broader risk sentiment and USD dynamics, with near-term rebounds possible but structurally capped.

Absent a material shift in US yields or a deterioration in China’s macro outlook, NZD is expected to trade within established ranges, with tactical upside on risk-on flows.

USD
USD Macro Thesis | Short-Term (1–4 Weeks)

1. US Growth Outlook: Mixed Signals, Resilience Tested

  • Recent data suggest US growth momentum is softening after a strong Q1, with April retail sales expected to stagnate (0.0% MoM consensus, downside risks flagged).
  • Manufacturing surveys (Empire, Philly Fed) remain in contraction territory, highlighting sectoral weakness.
  • Consumer spending shows signs of fatigue as fiscal drag builds and financial conditions tighten incrementally.
  • Business investment remains solid but may face headwinds from rising financing costs and geopolitical trade uncertainties.

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2. Inflation: Sticky Services, Easing Headline

  • Headline CPI is moderating, but services inflation remains elevated due to robust wage pressures and shelter costs.
  • Core PCE and CPI measures are not cooling fast enough to trigger imminent Fed cuts, though the disinflation process is ongoing.
  • The rebound in long-term inflation expectations (5Y5Y swaps back to 2.5%) keeps the Fed cautious.

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3. Fed Policy: Delayed Cuts, Compressed Path

  • The Fed is expected to keep rates unchanged in June, with the first cut now anticipated in July.
  • The latest rates outlook compresses four 25bp cuts into H2 2025, reflecting a “wait longer, cut harder” dynamic.
  • Labour market resilience and sticky services inflation argue for patience, but weakening consumption and credit tightening will force the Fed's hand by Q3.
  • The risk of policy error (cutting too late) is rising, which could eventually trigger a bond market rally and USD softness.

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4. Fiscal Deficits & Treasury Supply Pressuring Yields

  • Fiscal concerns are front and center, with new Republican tax proposals adding an estimated $3.8trn to debt levels over the next decade.
  • The ballooning fiscal deficit (6–7% of GDP range projected) keeps upward pressure on Treasury yields.
  • Foreign demand for US debt is waning, raising questions about the market’s capacity to absorb increased supply without yield premiums.

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5. USD Structural Factors: Capital Flows & Trade

  • The USD remains supported structurally by yield differentials and safe-haven flows, despite de-dollarisation narratives gaining traction.
  • Recent foreign inflows into Japanese and eurozone assets highlight diversification trends, but USD remains the global liquidity anchor.
  • Speculation over currency clauses in US-Asia trade deals has pressured USD against TWD and KRW, but official denials suggest limited near-term impact.
  • The USD “smile” dynamic persists: strong USD when US outperforms, weak USD when global growth rebounds, and strong USD during risk-off events.

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Summary Thesis

The USD short-term (1–4 weeks) macro outlook is neutral-to-mildly bullish:

  • Growth data is softening but not collapsing.
  • Inflation remains sticky, delaying Fed cuts.
  • Fiscal deficits and yield premiums support USD on rate differentials.
  • Global diversification flows are slow-moving, keeping USD demand intact.
  • The near-term bias is for USD resilience, especially against cyclical and low-yielding currencies, unless US data deteriorates sharply.

DXY softness is limited to positioning-driven pullbacks. The structural USD bid from rates and fiscal dynamics remains dominant in this timeframe.

Emerging & Exotic Markets
Emerging Markets & Exotics FX Macro Thesis | Short-Term (1–4 Weeks)

1. Broad EM Outlook: Crosscurrents of Trade Relief & USD Pressure

  • Easing global trade tensions (US-China tariff truce) is providing cyclical relief for EM FX.
  • However, persistent USD strength, driven by high US yields and fiscal concerns, limits broad-based EM FX rallies.
  • Global risk sentiment remains constructive but fragile, with selective EM currencies benefitting more from local stories than broad dollar weakness.

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2. CE3 (PLN, HUF, CZK): Benefitting from Eurozone Stabilization

  • Central European currencies are seeing improved flows as eurozone growth stabilizes and EURUSD trends higher.
  • HUF remains favoured for its carry and NBH’s focus on preventing currency depreciation.
  • CZK and PLN are constructive, but gains are flow-driven and capped by global USD dynamics.
  • Short EURCE3 positions remain attractive, especially with EURUSD bid.

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3. Asia FX: Trade Relief vs Intervention Risks

  • KRW and TWD have seen sharp gains on headlines suggesting US-Asia FX policy discussions, though US officials deny formal accords.
  • These currencies remain sensitive to further trade developments, but intervention risk from local authorities caps aggressive appreciation.
  • CNH remains under pressure from structural economic challenges, despite targeted support from Chinese policymakers.
  • INR faces uncertainty over India-US trade deal progress but benefits from domestic growth resilience and RBI’s proactive stance.

4. LatAm: Local Rates & Fiscal Stories Dominate

  • BRL supported by high carry and improving fiscal discipline signals, but USD strength keeps rallies contained.
  • MXN remains a high-beta play on global risk sentiment and US trade flows, vulnerable to US yield spikes.
  • CLP and COP benefit from commodity stabilization, though both remain sensitive to external risk-off events.

5. EMEA Exotics: Idiosyncratic Drivers Still Key

  • ZAR remains trapped in a range, with CPI and budget releases the next catalysts. Flows remain mixed, with systematics buying and hedge funds selling.
  • RUB heavy near 80.00 as geopolitical risks (Ukraine/Russia talks) persist, but optimism is limited by weak progress and sanctions overhang.
  • TRY remains fundamentally weak but stabilized in the near term by aggressive rate hikes and capital controls, though underlying imbalances are unresolved.

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6. Oil & Commodity Sensitivity

  • Brent and WTI softness weighs on oil-exporter FX (RUB, NOK, COP), limiting upside potential.
  • Industrial metals are stabilizing, supporting select EM exporters, but the overall boost is moderate given broader USD dynamics.

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Summary Thesis

The EM & Exotics FX short-term (1–4 weeks) macro outlook is mixed with selective opportunities:

  • CEE FX (HUF, PLN, CZK) remains constructive on EUR strength and carry trades.
  • Asia FX sees tactical strength (KRW, TWD) from trade headlines but is capped by intervention risk and USD yield dynamics.
  • LatAm offers carry-driven resilience but remains vulnerable to USD spikes.
  • EMEA exotics are dominated by idiosyncratic drivers, with RUB and ZAR constrained by geopolitics and fiscal concerns.

The broader EM FX complex faces a tug-of-war between local positives (rates, fiscal improvements, trade relief) and persistent external USD strength. Gains are tactical, not structural, in this timeframe.

Commodities
Oil
Crude Oil / Brent Macro Thesis | Short-Term (1–4 Weeks)

1. Demand Outlook: Trade Relief but Growth Uncertainty

  • The US-China tariff truce provides a short-term sentiment boost, but the fundamental impact on oil demand is limited.
  • Global economic growth indicators are stabilizing but not accelerating—particularly in China, where non-property sector demand supports industrial activity but broad consumption remains soft.
  • OECD demand remains sluggish, with refined product consumption constrained by high prices and weak seasonal demand.
  • India’s demand remains robust, offsetting some global weakness, but overall demand growth remains modest.

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2. Supply Dynamics: OPEC+ Steady, Iranian Supply in Focus

  • OPEC+ production has remained disciplined, but compliance is slipping at the margin as producers test higher output levels amid softer prices.
  • Iranian crude supply is increasingly under scrutiny following comments from senior advisors signalling willingness to reduce uranium stockpiles in exchange for sanctions relief.
  • Market is pricing in the potential for incremental Iranian barrels, which is adding downward pressure to Brent and WTI.
  • US production remains near record highs, with shale output resilient despite capital discipline rhetoric.

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3. Inventories & Physical Market Indicators

  • US crude inventories have built in recent weeks, reflecting tepid refining demand and resilient domestic production.
  • Global floating storage is rising marginally, indicating a softening in physical market tightness.
  • Time spreads (Brent backwardation) have narrowed, signalling easing supply constraints and weakening near-term demand-supply imbalances.

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4. Geopolitical Risks Muted but Not Gone

  • Middle East geopolitical risks (Israel/Iran tensions, Red Sea disruptions) have faded from immediate market focus.
  • However, geopolitical risk premium remains embedded, limiting aggressive downside moves, especially if tensions flare unexpectedly.
  • Russia/Ukraine dynamics continue to influence market psychology but are not materially disrupting crude flows currently.

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5. Macro Crosscurrents: USD Strength & Financial Flows

  • Persistent USD strength, driven by high US yields and fiscal concerns, weighs on oil prices via the dollar-denominated cost channel.
  • Financial market positioning remains light, with speculative long positions reduced amid recent price softness.
  • Broader risk sentiment is supportive but not sufficient to drive a sustainable oil rally in the absence of stronger demand data.

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Summary Thesis

The short-term (1–4 weeks) macro outlook for Crude Oil & Brent is neutral-to-bearish:

  • Demand growth is steady but uninspiring, with China stabilizing but OECD weak.
  • Supply risks are skewed to the upside, particularly from potential Iranian barrels.
  • Inventories are building, and time spreads are softening, reflecting a loosening market.
  • USD strength adds an additional headwind.
  • Geopolitical risks remain a latent upside factor but are not front and center for now.

The near-term path of least resistance is for oil to remain under pressure, with tactical bounces on geopolitical or risk sentiment shifts, but structural upside is limited absent a demand surprise.

Gas
Natural Gas Macro Thesis | Short-Term (1–4 Weeks)

1. Supply Surplus Remains the Dominant Theme

  • Global natural gas markets continue to face excess supply, particularly in the US and Europe.
  • US production remains high due to associated gas from oil drilling, even as rig counts decline.
  • European gas storage levels are well above seasonal averages, sitting near 65% capacity — significantly higher than prior years for May.
  • LNG shipments remain strong, particularly from the US and Qatar, while Asian LNG demand is not rebounding fast enough to absorb excess cargo.

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2. Demand Lacks Seasonal Tailwinds

  • Spring shoulder season is typically a period of weak demand as heating declines and cooling demand has yet to rise meaningfully.
  • In Europe, mild weather is further dampening near-term consumption.
  • Asian demand remains flat, with Chinese industrial gas use recovering slowly and Japan/Korea demand still below historical averages.
  • US power sector gas burn is modest, and renewables are taking a larger share of electricity generation during mild weather periods.

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3. LNG Export Market Supportive but Capped

  • While LNG exports are running near capacity, global price spreads are narrowing, reducing marginal export profitability.
  • European TTF and Asian JKM prices remain relatively soft, limiting the upside for US Henry Hub-based LNG exports.
  • US export facility maintenance and geopolitical uncertainties around the Red Sea and Panama Canal routes also add noise but not bullish structural pressure.

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4. Storage Levels Remain Elevated

  • US EIA storage data continues to show injections above the 5-year average.
  • Without a weather-driven demand spike, inventories are expected to continue trending toward the top of the seasonal range.
  • High storage levels create a soft ceiling on prices in the short term unless a supply disruption or heatwave triggers a demand spike.

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5. Macro Headwinds and Financial Positioning

  • Broader macro themes, including USD strength and higher-for-longer interest rates, reduce the attractiveness of long natural gas exposure.
  • Speculative positioning in gas markets is light, with limited conviction on directional bets, reflecting a lack of clear catalysts.
  • The market remains vulnerable to downside if mild weather persists and export demand softens.

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Summary Thesis

The short-term (1–4 weeks) macro outlook for Natural Gas is bearish:

  • Structural oversupply and elevated inventories dominate.
  • Seasonal demand remains soft, with no strong weather tailwinds.
  • LNG exports help balance, but global demand is not strong enough to tighten markets.
  • Financial flows and positioning reflect a lack of bullish conviction.

Absent a significant weather event (e.g., early heatwave) or an unexpected geopolitical disruption, natural gas prices are likely to remain under pressure, with risks skewed to the downside.

Gold
Gold Macro Thesis | Short-Term (1–4 Weeks)

1. Risk Sentiment Improving, Reducing Haven Demand

  • The recent US-China tariff truce and easing geopolitical tensions (Middle East, Ukraine) have reduced immediate safe-haven demand for gold.
  • Global risk assets are supported, limiting capital rotation into defensive assets like gold in the short term.
  • This “risk-on” environment challenges further gold upside unless fresh geopolitical or economic shocks emerge.

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2. US Rates & USD Dynamics Are Key Headwinds

  • US long-term yields remain elevated due to persistent fiscal concerns and delayed Fed rate cuts.
  • Rising US Treasury yields increase opportunity costs of holding non-yielding assets like gold.
  • USD strength, driven by rates and fiscal dynamics, adds further pressure by making gold more expensive for non-USD buyers.

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3. Central Bank Gold Buying Easing

  • Central bank demand, a key pillar of gold’s rally, has slowed.
  • Q1 2025 central bank purchases were down 33% from the prior quarter, though still historically elevated.
  • While structural diversification away from USD remains intact, the pace of gold accumulation is moderating, reducing a critical tailwind.

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4. ETF Flows Softening, Investor Appetite Cooling

  • After strong Q1 inflows, gold ETFs are now seeing reduced investor demand.
  • Softer US inflation prints and fading immediate recession fears have led to a reduction in defensive allocations.
  • ETF outflows, if they persist, represent a technical and sentiment headwind for gold in the short term.

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5. Physical Demand & Seasonal Factors Neutral

  • Physical demand from India and China remains steady but lacks the strength to offset broader macro headwinds.
  • Seasonal demand factors (wedding season, festivals) are not sufficient to drive a breakout in the current macro context.
  • Industrial and jewelry demand trends are stable but not accelerating.

‍

Summary Thesis

The gold short-term (1–4 weeks) macro outlook is neutral-to-bearish:

  • Diminished safe-haven demand due to improving risk sentiment.
  • Persistent USD strength and high US yields are material headwinds.
  • Central bank and ETF demand slowing removes key structural supports.
  • Physical demand is steady but lacks the scale to counterbalance macro pressures.

Unless risk sentiment deteriorates sharply or US yields roll over decisively, gold is likely to consolidate or drift lower in the near term, with upside capped by external macro factors.

Silver
Silver Macro Thesis | Short-Term (1–4 Weeks)

1. Industrial Demand Stable but Not Accelerating

  • Silver’s dual role as an industrial and precious metal ties its outlook closely to global manufacturing and green energy sectors.
  • Chinese industrial activity is stabilizing, particularly in non-property sectors (infrastructure, heavy machinery), providing a steady demand base.
  • However, global manufacturing PMIs remain mixed, limiting broad-based acceleration in silver’s industrial demand.
  • Photovoltaic (solar) demand for silver remains robust, but seasonal fluctuations and high inventory levels are keeping demand growth contained.

‍

2. Precious Metals Sentiment Weakening

  • As with gold, silver’s precious metal demand is facing headwinds from improving global risk sentiment.
  • The de-escalation in US-China trade tensions reduces haven demand for silver.
  • ETF inflows into silver have softened, reflecting diminished investor appetite for defensive assets.

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3. US Yields & USD Strength as Headwinds

  • Elevated US Treasury yields increase the opportunity cost of holding silver, similar to gold.
  • USD strength adds additional pressure by making silver more expensive for international buyers, particularly in emerging markets.
  • These macro headwinds are dampening speculative interest in silver.

‍

4. Gold-Silver Correlation Acting as a Drag

  • Silver typically follows gold’s directional trends, and with gold losing momentum due to easing safe-haven flows, silver is similarly pressured.
  • However, silver’s industrial demand offers marginal support, making it less vulnerable to sharp declines compared to gold in risk-on environments.

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5. Supply-Side Dynamics Neutral

  • Global silver mine production remains steady, with no significant supply disruptions expected in the short term.
  • Recycling flows have normalized after rising in early 2024, limiting additional supply-side pressure.
  • Overall, supply is balanced and not a major driver of price action in the current environment.

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Summary Thesis

The short-term (1–4 weeks) macro outlook for Silver is neutral-to-bearish:

  • Industrial demand is stable but lacks strong growth catalysts.
  • Precious metals sentiment is weakening amid improved global risk appetite.
  • Elevated US yields and a strong USD act as consistent macro headwinds.
  • Silver’s link to gold’s performance keeps it under pressure, though industrial demand provides a modest cushion.

Unless global manufacturing surprises to the upside or US rates soften meaningfully, silver is likely to consolidate or drift lower alongside gold, with any rallies capped by external macro factors.

Platinum
Platinum Macro Thesis | Short-Term (1–4 Weeks)

1. Industrial Demand Soft but Stabilizing

  • Platinum’s primary demand comes from the automotive sector (catalytic converters), industrial applications, and jewellery.
  • Global auto production is recovering modestly, particularly in China and India, but remains below pre-pandemic highs in Europe and the US.
  • Hydrogen fuel cell demand, a long-term driver, is not yet material at scale for near-term price impact.
  • Industrial demand is steady but lacks strong growth impulses in the next month.

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2. Supply Dynamics: Gradual Normalization Post-Disruptions

  • South African output, which dominates global supply, has recovered after past electricity and labor disruptions.
  • Global platinum production is stabilizing, reducing fears of immediate supply shortages.
  • Recycling supply has returned to normal levels after spiking in early 2024, adding modest pressure to market balances.

‍

3. Substitution Flows Limited

  • Substitution of platinum for palladium in catalytic converters has been a supportive theme, but much of the low-hanging fruit has been realized.
  • With palladium prices sharply lower and supply more available, substitution benefits for platinum are moderating.

‍

4. Investment Demand Weakens Alongside Precious Metals

  • As with gold and silver, platinum is facing outflows from ETFs and reduced investor interest amid improving global risk sentiment.
  • Elevated US yields and a strong USD reduce the attractiveness of non-yielding precious metals.
  • The broader decline in speculative positioning reflects diminished safe-haven demand.

‍

5. Structural Factors & Long-Term Narrative Intact, but Irrelevant Short-Term

  • The long-term narrative of platinum in green hydrogen and clean energy remains valid but is not a driver for 1–4 week horizons.
  • Near-term price action is overwhelmingly driven by industrial trends and broader precious metals sentiment.

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Summary Thesis

The platinum macro outlook for the next 1–4 weeks is neutral-to-bearish:

  • Industrial demand is steady but uninspiring, with auto sector gains offset by weak broader industrial growth.
  • Supply recovery from South Africa and normalized recycling flows add mild supply-side pressure.
  • Precious metals sentiment is softening due to USD strength, high US yields, and reduced haven demand.
  • Platinum’s structural bull case remains a long-term story, not a near-term catalyst.

Platinum is likely to remain range-bound with a mild downside bias, tracking overall precious metals sentiment while lacking sector-specific bullish catalysts.

Agriculture
Agriculture Commodities Macro Thesis | Short-Term (1–4 Weeks)

1. Global Supply Conditions Remain Comfortable

  • Global stock levels for key agriculture commodities (wheat, corn, soybeans) remain adequate, with no immediate supply shocks.
  • Strong harvests in South America (Brazil & Argentina) are adding to global soybean and corn availability.
  • US planting progress is on schedule with favorable weather, reducing near-term supply risks.
  • For wheat, ample global stocks and soft import demand from key consumers (Middle East, North Africa) are keeping prices contained.

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2. Demand Trends: Sluggish but Stable

  • Global demand growth for grains and oilseeds is steady but not accelerating.
  • Chinese imports are stable but lack the surge seen in prior years due to subdued feed demand and soft economic momentum.
  • Biofuel demand (soybean oil, corn ethanol) remains a supportive factor but is already well-priced in.
  • Food inflation pressures are easing in developed markets, reducing speculative interest in agricultural commodities.

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3. Weather Risks Muted (For Now)

  • Short-term weather forecasts point to normal-to-favorable conditions across key growing regions (US Midwest, Black Sea, South America).
  • No imminent El Niño/La Niña disruptions are expected to materially impact yields within the 1–4 week horizon.
  • However, markets remain sensitive to any unexpected adverse weather developments, especially for corn during the pollination phase in coming weeks.

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4. Geopolitical Factors Less Influential Short-Term

  • Ukraine’s agricultural exports continue under alternative routes despite the ongoing war, mitigating fears of global supply disruptions.
  • Middle East tensions have limited direct impact on grain flows, keeping geopolitical risk premium in agri-markets subdued.
  • Trade barriers (e.g., tariffs, sanctions) are more prominent in metals and energy than in agriculture for now.

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5. Speculative Positioning & Financial Flows

  • Speculative positioning in agricultural commodities remains light after recent price declines.
  • Large funds are hesitant to add long exposure amid soft demand, comfortable stocks, and USD strength.
  • Without a strong bullish catalyst (weather, supply shock), financial flows are unlikely to drive a material rally in the short term.

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Summary Thesis

The agriculture commodities outlook for the next 1–4 weeks is neutral-to-bearish:

  • Global supply is adequate, and harvests are progressing well.
  • Demand is stable but lacks upside drivers.
  • Weather risks are contained in the near term.
  • Speculative flows remain light, with little conviction for a rally.
  • USD strength adds marginal pressure via global pricing dynamics.

Absent a sudden weather disruption or geopolitical shock, agricultural commodities are expected to trade sideways with a mild downside bias.

Equities
S&P500
S&P 500 Macro Thesis | Short-Term (1–4 Weeks)

1. Earnings Resilience but Valuation Stretched

  • Q1 earnings season has largely surprised to the upside, with margin resilience despite higher input costs.
  • However, forward earnings revisions are flattening, reflecting cautious corporate guidance amid macro uncertainty.
  • Valuations remain elevated, with S&P 500 forward P/E ratios above historical averages, particularly vulnerable if bond yields stay high.

‍

2. US Growth Softening but No Recession in Sight (Yet)

  • The US economy shows signs of deceleration: retail sales stagnating, manufacturing surveys contracting, and consumer sentiment wobbling.
  • However, labour markets remain tight, and business investment is holding up.
  • The “soft landing” narrative persists, supporting equity valuations in the near term but with asymmetric downside risks if data deteriorates further.

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3. Fed Policy: No Immediate Relief for Equities

  • The Fed is unlikely to cut rates in June, pushing the first cut to July, with a compressed easing cycle expected in H2.
  • High-for-longer rates maintain tight financial conditions, which historically weighs on equity multiples.
  • Any signs of stickier inflation will keep rate cut expectations in check, capping equity upside.

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4. Fiscal Deficits & Treasury Supply Pressuring Rates

  • Persistent US fiscal deficits and increasing Treasury issuance continue to drive yields higher.
  • Elevated yields act as a headwind for equities through valuation compression and alternative asset competition (bonds, money markets).
  • Fiscal policy-induced volatility (debt ceiling negotiations, tax bills) adds to headline risks for equities.

‍

5. Market Positioning & Sentiment

  • Sentiment remains bullish, with high retail participation and low volatility indices.
  • Positioning in tech and megacap stocks is crowded, increasing fragility to any negative surprise.
  • Breadth is narrow, with leadership concentrated in a few sectors (tech, comms), raising concerns of market vulnerability to sector-specific shocks.

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6. Macro Crosscurrents: Geopolitics & Trade Relief

  • Easing US-China trade tensions provide a supportive backdrop for global growth proxies.
  • However, geopolitical risks (Middle East, Russia/Ukraine) remain latent, with potential to reintroduce volatility.
  • The S&P 500 benefits indirectly from improved global trade sentiment but remains sensitive to US-specific fiscal and rates dynamics.

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Summary Thesis

The S&P 500 short-term (1–4 weeks) macro outlook is neutral-to-bearish:

  • Earnings are resilient, but valuations are stretched and vulnerable to rates.
  • Growth is decelerating, but not collapsing, supporting a soft landing narrative for now.
  • Fed policy delay, fiscal pressures, and high bond yields cap upside.
  • Crowded positioning and narrow market breadth increase fragility.
  • Trade relief helps sentiment, but structural macro headwinds remain dominant.

Without a material easing in yields or an upside growth surprise, the S&P 500 is likely to consolidate or face mild downside correction risks in this timeframe.

NASDAQ
NASDAQ Macro Thesis | Short-Term (1–4 Weeks)

1. Earnings Growth Driven by Tech & AI Hype

  • NASDAQ earnings are being led by megacap tech and AI-exposed companies, which continue to deliver strong revenue and margin performance.
  • However, forward earnings revisions are beginning to flatten, as lofty expectations meet slowing enterprise IT spending and cautious corporate capex.
  • AI infrastructure buildout (cloud, semiconductors) remains a strong thematic driver but is heavily priced in, making the sector vulnerable to any guidance downgrades.

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2. Valuations Are Rich, Highly Sensitive to Rates

  • NASDAQ’s forward P/E multiples are significantly above historical averages, trading at premium levels relative to S&P 500 and global peers.
  • Elevated US Treasury yields (10Y approaching 4.5%) increase discount rates, directly pressuring tech valuations.
  • A “higher-for-longer” Fed stance compresses upside potential, as tech stocks are particularly duration-sensitive.

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3. Liquidity & Financial Conditions No Longer Supportive

  • Unlike 2023’s disinflation rally, current financial conditions remain tight, with real rates elevated.
  • Liquidity injections are absent, and QT continues, removing a prior tailwind for NASDAQ performance.
  • Market hopes for aggressive Fed easing are fading, with cuts pushed to July at the earliest, reducing speculative support for high-multiple tech names.

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4. Positioning Risks: Overcrowded Longs in Megacaps

  • Investor positioning remains heavily skewed towards a handful of megacap tech names, increasing fragility.
  • Any negative catalyst (earnings miss, regulatory action, bond yield spike) could trigger sharp profit-taking.
  • Breadth remains narrow, raising concerns of an unsustainable rally driven by passive flows and momentum strategies.

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5. Global Macro Crosswinds: Trade Relief vs USD Strength

  • Easing US-China trade tensions are a mild positive for global tech supply chains, benefiting NASDAQ sentiment.
  • However, persistent USD strength limits foreign investor inflows and increases FX headwinds for multinationals.
  • Semiconductor sector remains sensitive to US export restrictions and geopolitics, adding an element of policy risk.

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6. Long-Term Bull Case Intact, Short-Term Vulnerabilities Elevated

  • Structural trends in AI, cloud computing, and digital transformation remain bullish over multi-year horizons.
  • In the next 1–4 weeks, however, macro headwinds (yields, Fed policy, fiscal concerns) dominate price action.
  • Sentiment remains bullish but is increasingly detached from near-term macro fundamentals.

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Summary Thesis

The NASDAQ short-term (1–4 weeks) macro outlook is neutral-to-bearish:

  • Earnings leadership is intact but priced for perfection.
  • Valuation sensitivity to rates is acute, with yields remaining a major headwind.
  • Liquidity and financial conditions no longer support speculative rallies.
  • Overcrowded positioning in megacap tech increases downside fragility.
  • Trade relief helps sentiment marginally, but USD strength and Fed delays weigh on flows.

Without a material drop in yields or a positive macro surprise, NASDAQ is vulnerable to correction or at least a period of consolidation.

Dow Jones
Dow Jones Macro Thesis | Short-Term (1–4 Weeks)

1. Earnings: Defensive Strength with Limited Growth

  • Dow Jones components (industrials, healthcare, financials, consumer staples) have shown steady but unspectacular earnings.
  • Margin pressure is easing as supply chains normalize, but revenue growth remains constrained by slowing domestic demand.
  • Unlike the NASDAQ, the Dow lacks exposure to high-growth sectors like tech/AI, making its earnings profile more defensive but less dynamic.

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2. Valuation Reasonable but Growth-Linked

  • The Dow’s valuation is closer to long-term averages, trading at a discount relative to the S&P 500 and NASDAQ.
  • However, valuation support is contingent on earnings stability; any signs of US growth deceleration would directly impact Dow sectors (industrials, banks, consumer staples).
  • High dividend yields and buyback programs offer downside cushion but do not catalyze new upside without stronger macro momentum.

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3. Interest Rate & Yield Sensitivity

  • While less duration-sensitive than tech-heavy indices, higher US yields still weigh on Dow components through:
    • Increased financing costs for industrials.
    • Pressure on consumer-sensitive sectors via tighter financial conditions.
    • Margin compression for rate-sensitive sectors like real estate and utilities.
  • Elevated yields and “higher-for-longer” Fed stance limit valuation multiple expansion.

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4. US Growth Softening, Global Exposure Mixed

  • The Dow’s heavyweights are exposed to both domestic US activity and global trade flows.
  • Slowing US consumption and flattening business investment are headwinds for cyclical Dow sectors.
  • However, easing US-China trade tensions marginally benefit multinational industrials and exporters within the index.
  • Global growth stabilization (Europe, China non-property sectors) provides limited support but not enough to drive a bullish thesis alone.

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5. Defensive Positioning Favours Dow in Risk-Off Scenarios

  • In a market correction or risk-off environment, Dow components (healthcare, consumer staples, utilities) may outperform relative to growth-focused indices.
  • The Dow serves as a defensive rotation candidate, but still faces absolute headwinds from tight financial conditions and slowing growth.

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6. Fiscal & Policy Uncertainties

  • Fiscal policy debates (tax bills, debt ceiling) create headline risk for Dow constituents exposed to government contracts and infrastructure spending.
  • Regulatory risks remain sector-specific but are not a broad-based driver for the index in the near term.

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Summary Thesis

The Dow Jones short-term (1–4 weeks) macro outlook is neutral-to-bearish:

  • Earnings are stable but lack growth catalysts.
  • Valuations are reasonable but capped by macro headwinds.
  • Elevated yields and Fed policy delays act as a ceiling for upside.
  • Global trade relief is a mild positive, but domestic growth slowdown is a larger headwind.
  • Defensive positioning supports relative outperformance in risk-off, but absolute upside is limited.

The Dow is likely to remain range-bound with a slight defensive bid, outperforming NASDAQ in corrections but lacking momentum for sustained upside without a positive macro catalyst.

DAX40
DAX 40 Macro Thesis | Short-Term (1–4 Weeks)

1. Eurozone Growth Stabilizing, Supporting DAX Cyclicals

  • Eurozone GDP growth printed +0.4% QoQ in Q1, reflecting a stabilization after last year’s stagnation.
  • Key German sectors (manufacturing, industrials, autos) are benefiting from improved global trade sentiment post US-China tariff truce.
  • However, domestic demand remains tepid, with consumer spending constrained by real income pressures and cautious corporate investment.

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2. Inflation Moderating but Services Sticky

  • German headline inflation continues to trend lower, aligning with the broader eurozone disinflation path.
  • Services inflation, however, remains elevated due to wage pressures, limiting the scope for aggressive ECB easing.
  • This mixed inflation profile supports a cautious ECB stance, indirectly benefiting DAX export-oriented names by keeping the euro competitive.

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3. ECB Policy: Easing Expected but Gradual

  • Markets anticipate a June ECB rate cut, but subsequent cuts will be data-dependent and measured.
  • A dovish but cautious ECB helps support DAX valuations by balancing growth support without triggering euro appreciation that would hurt exporters.
  • Tight financial conditions persist, but relief is in sight, offering mild tailwinds for equities in H2.

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4. Global Trade Sentiment Improving

  • The US-China tariff de-escalation is a net positive for German exporters, particularly in autos, industrial machinery, and chemicals.
  • Stabilization in Chinese non-property sector demand supports German capital goods exports.
  • Easing global supply chain pressures also reduce input cost volatility for DAX constituents.

‍

5. Valuations & Earnings Outlook Reasonable

  • DAX valuations remain fair, trading around historical averages with less froth than US peers.
  • Earnings expectations are stabilizing after downgrades in 2023, with mild upward revisions driven by global trade recovery.
  • Margin pressures from energy costs have eased, supporting profitability for industrials and cyclicals.

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6. EUR Strength & USD Dynamics as External Risk

  • EURUSD strength on diversification flows is a mild headwind for DAX exporters but is offset by improved external demand.
  • Persistent USD strength caps euro gains, providing a balanced FX backdrop for the DAX.
  • Capital flows remain supportive for eurozone equities, adding a structural bid to German stocks.

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Summary Thesis

The DAX 40 short-term (1–4 weeks) macro outlook is neutral-to-bullish:

  • Eurozone growth is stabilizing, supporting cyclicals.
  • ECB easing is coming, but gradual, providing a policy tailwind without pressuring EUR competitiveness.
  • Global trade relief and supply chain normalization benefit export-heavy DAX sectors.
  • Valuations are reasonable, earnings expectations are stabilizing.
  • Risks stem from USD dynamics and global growth surprises, but the near-term bias favors consolidation with upside potential.

Absent a global growth shock or sharp USD rally, the DAX 40 is well-positioned for relative outperformance among major indices in the coming month.

FTSE100
FTSE 100 Macro Thesis | Short-Term (1–4 Weeks)

1. UK Growth Data Overstated, But Underlying Stability

  • Q1 UK GDP surprised with +0.7% QoQ growth, driven by one-off factors like business investment front-loading and export timing distortions.
  • Year-on-year growth actually slowed, reflecting a still-fragile domestic backdrop.
  • The FTSE 100, with its global exposure (roughly 75% of revenues ex-UK), is less sensitive to local GDP fluctuations, but domestic stability reduces tail risk.

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2. Inflation Moderating, BoE to Ease Cautiously

  • UK inflation continues to decelerate, though services inflation remains sticky.
  • The BoE is expected to deliver its first rate cut in Q3, maintaining a cautious tone due to persistent wage pressures.
  • Rate differentials with the ECB and Fed are narrowing slowly, limiting sharp currency moves, which benefits the FTSE's large multinational component.

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3. FX Tailwinds: GBP Stability Supports Earnings

  • A relatively stable GBP reduces FX translation risks for FTSE multinationals.
  • Historically, a weaker GBP boosts FTSE performance (due to USD/EUR revenues), but current GBP levels are not a significant headwind or tailwind.
  • GBP performance remains driven by USD dynamics and global risk sentiment rather than domestic fundamentals.

‍

4. Commodity Prices & Sectoral Impact

  • FTSE’s heavy weighting in energy (BP, Shell) and mining (Glencore, Anglo American) links index performance closely to commodity trends.
  • Crude oil remains under mild pressure from supply-side dynamics (Iranian supply, OPEC+ discipline concerns), capping energy sector upside.
  • Industrial metals are stabilizing but lack strong catalysts for a breakout, keeping miners range-bound.

‍

5. Defensive Characteristics & Valuation Support

  • FTSE 100 offers high dividend yields and value sector exposure (energy, financials, consumer staples), making it relatively defensive.
  • Valuations are undemanding, with forward P/E ratios below global peers, offering a margin of safety.
  • Institutional flows favouring “value over growth” in a high-rate environment support FTSE resilience.

‍

6. Global Trade Relief & Fiscal Noise

  • Easing US-China trade tensions are positive for global trade proxies, benefiting FTSE exporters.
  • Domestic fiscal noise (tax policies, pre-election uncertainty) has minimal direct impact on FTSE earnings but could influence sentiment.
  • Broader macro stability in the eurozone and US provides a constructive backdrop for FTSE constituents.

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Summary Thesis

The FTSE 100 short-term (1–4 weeks) macro outlook is neutral-to-bullish:

  • UK domestic data is overstated but stable, reducing downside risks.
  • Inflation moderating, BoE cautious easing path supportive for equities.
  • Commodity sector capping absolute upside but providing stability.
  • Defensive characteristics, cheap valuations, and high dividend yield offer downside protection.
  • Global trade relief supports multinational earnings, with GBP stability keeping FX risks balanced.

The FTSE 100 is positioned for relative outperformance in a “higher-for-longer” rate environment, with limited catalysts for a breakout but solid support for consolidation and modest gains.

JPN225
Nikkei 225 Macro Thesis | Short-Term (1–4 Weeks)

1. Domestic Growth Stable but Sluggish

  • Japan’s economy remains in a modest expansion phase, supported by solid capital expenditure and resilient services demand.
  • Manufacturing shows gradual improvement, with easing supply chain constraints aiding output, though global demand remains a limiting factor.
  • Consumer spending is under pressure from real wage stagnation and higher living costs, capping domestic demand upside.

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2. Inflation Cooling, Services Sticky

  • Headline CPI is moderating, driven by energy subsidies and base effects.
  • Services inflation remains firm, reflecting ongoing wage negotiations and domestic cost pressures.
  • The BoJ maintains its cautious approach, emphasizing sustainability of inflation and wage growth rather than headline prints.

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3. BoJ Policy: Ultra-Gradual Normalization

  • Despite the March rate hike, the BoJ remains dovish, with no urgency for further tightening.
  • The central bank focuses on managing financial stability, tolerating JPY weakness as long as inflation expectations stay anchored.
  • The BoJ’s slow normalization provides a supportive liquidity backdrop for equities.

‍

4. Yen Weakness: Tailwind for Exporters

  • Persistent JPY weakness continues to benefit Nikkei 225 exporters (autos, electronics, industrials).
  • USDJPY remains elevated due to wide rate differentials, supporting earnings for Japan’s globally exposed corporates.
  • Currency-sensitive sectors remain key beneficiaries, while domestic sectors lag.

‍

5. Global Trade & Supply Chain Relief

  • US-China trade de-escalation aids Japanese exporters by stabilizing supply chains and reducing external demand uncertainty.
  • Non-property sector demand from China supports Japanese capital goods exports.
  • Geopolitical risks (Red Sea, Russia-Ukraine) remain monitored but are not immediate threats to Japan’s trade flows.

‍

6. Valuations & Foreign Flows Supportive

  • Nikkei valuations are reasonable relative to global peers, with forward P/E ratios still below US megacap benchmarks.
  • Japan continues to attract foreign capital seeking diversification and exposure to undervalued developed markets.
  • Corporate governance reforms and shareholder return initiatives (buybacks, dividends) enhance the index’s investment appeal.

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Summary Thesis

The Nikkei 225 short-term (1–4 weeks) macro outlook is bullish:

  • Stable growth, easing supply chains, and JPY weakness support earnings.
  • BoJ policy remains accommodative, providing a supportive liquidity environment.
  • Global trade relief and foreign investor interest underpin index strength.
  • Valuations remain attractive versus global peers, with corporate reforms adding structural support.

Absent a sharp reversal in global risk sentiment or aggressive USDJPY intervention, the Nikkei 225 remains well-positioned for continued outperformance in the near term.

Global News
Global News & Events Macro Thesis | Short-Term (1–4 Weeks)

1. US-China Trade Truce: Sentiment Booster but Scope Limited

  • The US-China reciprocal tariff truce is a key near-term positive, reducing global trade uncertainty.
  • Tariffs have been reduced temporarily (US from 145% to 30% on Chinese goods, China to 10% on US goods) for 90 days.
  • Markets are viewing this as a sentiment boost but recognize it is not a structural resolution—risks of re-escalation post-July remain.
  • Positive for global cyclicals, industrials, and trade-exposed currencies (EUR, AUD, Nikkei).

‍

2. US Fiscal Policy: Rising Deficits, Yield Pressures

  • The Republican tax bill advancing in Congress would extend 2017 tax cuts and add ~$3.8 trillion to US debt over the next decade.
  • Fiscal deficits projected to stay above 6% of GDP through 2030.
  • Treasury issuance concerns are keeping US yields elevated, pressuring global risk assets and emerging markets.
  • Fiscal policy overhang is a persistent macro drag, with potential to trigger bond market volatility.

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3. Central Bank Policy Outlooks Diverging

  • Fed: First rate cut pushed to July, with compressed easing path (4 cuts expected in H2 2025). High-for-longer rates remain a macro headwind.
  • ECB: Likely to cut in June, but further easing will be data-dependent. Supports EUR resilience.
  • BoE: Dovish tilt, but sticky services inflation delays rate cuts. Markets expect first cut in Q3.
  • BoJ: Ultra-gradual normalization with no imminent hikes. Tolerating JPY weakness unless disorderly.

‍

4. Geopolitical Tensions: Background Risk, Not Immediate Catalyst

  • Russia-Ukraine conflict continues but with limited new macro market impact short term.
  • Middle East tensions (Iran nuclear talks, Red Sea disruptions) have eased but remain latent risks for oil and safe-haven assets.
  • US foreign policy focus remains on trade, with less near-term escalation in geopolitical fronts.

‍

5. Chinese Macro Stabilization, Limited Global Impulse

  • China’s economy shows selective stabilization in non-property sectors (infrastructure, heavy industry), supporting global trade flow normalization.
  • Consumer demand remains soft, capping broader EM Asia benefits.
  • Policy support remains targeted, with no large-scale stimulus expected, limiting upside for global commodities.

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6. Market Positioning & Sentiment

  • Investor positioning is crowded in US tech (NASDAQ), light in cyclicals and commodities.
  • Broad risk sentiment is positive but fragile, with high sensitivity to US data and yields.
  • VIX remains suppressed, but tail risk hedging demand is picking up marginally.

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Summary Thesis

The global macro environment for the next 1–4 weeks is mixed with asymmetric risks:

  • Trade relief and central bank divergence support select assets (EUR, Nikkei, cyclicals).
  • US fiscal overhang and high yields are key global headwinds.
  • Geopolitical risks remain in the background but can resurface.
  • Positioning suggests markets are vulnerable to negative surprises, especially in US equities.
  • Overall, macro crosscurrents favour cautious risk exposure with selective bullish plays in undervalued regions and sectors.
Disclaimer: Trade ideas provided on this page are for informational and educational purposes only and should not be considered financial advice or trading signals. These trade ideas are based on our global macro analysis and are intended to provide insight into market trends and potential opportunities.EliteTraders does not guarantee any specific outcome or profit. Trading involves significant risk, and you should always conduct your own analysis and risk assessment before making any trading decisions. By using this research, you acknowledge that EliteTraders is not responsible for any financial losses incurred based on the information provided.
Trade Ideas
Macro Trade Ideas | May 2025 | 1–4 Week Horizon

1. EUR/USD — Long

Macro Reasoning:

  • Eurozone growth is stabilizing, and inflation is moderating but sticky in services, leading to a cautious ECB easing path.
  • Strong portfolio inflows into eurozone assets amid global diversification away from USD.
  • US fiscal concerns and elevated Treasury yields create headwinds for further USD upside.
  • EUR resilience is underpinned by balanced growth and capital flows, supporting outperformance against USD in the near term.

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2. AUD/USD — Long

Macro Reasoning:

  • Australia’s inflation is tracking near the RBA’s target, with a robust labour market limiting aggressive policy easing.
  • China’s non-property sector demand (infrastructure, industrials) supports Australian exports.
  • Global risk sentiment improving post-US-China tariff truce benefits cyclical currencies like AUD.
  • While USD strength caps upside, AUD’s domestic macro and trade exposure provide a tactical long opportunity.

‍

3. USD/JPY — Long

Macro Reasoning:

  • Wide US-Japan yield differentials continue to support USDJPY upside.
  • BoJ remains ultra-gradual in normalization, with no rush for further hikes.
  • Japanese real money accounts continue to invest abroad, reinforcing capital outflows.
  • Global risk-on sentiment reduces safe-haven demand for JPY, keeping USDJPY supported.

‍

4. USD/CHF — Long

Macro Reasoning:

  • Swiss inflation is undershooting target, with the SNB signaling room for further easing.
  • CHF remains overbought from structural hedging flows, but macro fundamentals argue for depreciation.
  • Persistent USD strength driven by US yields and fiscal dynamics supports USDCHF upside.
  • Intervention risk by the SNB is low unless appreciation becomes disorderly.

‍

5. GBP/USD — Neutral to Mild Short

Macro Reasoning:

  • UK growth data is overstated due to seasonal distortions and export front-loading.
  • Services inflation remains sticky, but BoE is expected to start easing cautiously by Q3.
  • USD strength remains a headwind, and crowded long positioning in GBP increases fragility.
  • Without a clear domestic catalyst, GBP/USD is vulnerable to USD-driven corrections.

‍

6. USD/CNH — Long

Macro Reasoning:

  • Chinese economic activity is stabilizing but lacks strong consumer demand recovery.
  • Structural capital outflows and lack of aggressive policy stimulus keep CNY under pressure.
  • USD strength persists on global yield differentials and US fiscal dynamics.
  • De-dollarization narratives are long-term but not sufficient to reverse near-term USD/CNH bias.

‍

7. EUR/JPY — Long

Macro Reasoning:

  • Eurozone stabilization and strong capital inflows contrast with Japan’s ultra-dovish BoJ.
  • JPY remains fundamentally weak due to rate differentials and persistent outflows.
  • Risk-on sentiment favors EUR strength relative to JPY.
  • Structural divergence between ECB’s gradual easing and BoJ’s glacial normalization supports this cross.

‍

8. XAU/USD — Short

Macro Reasoning:

  • Improving global risk sentiment reduces safe-haven demand for gold.
  • ETF flows are softening, and central bank buying has slowed materially.
  • Elevated US yields and a strong USD remain persistent headwinds.
  • Without a fresh geopolitical or macro shock, gold is likely to consolidate or drift lower.

‍

9. USD/MXN — Long

Macro Reasoning:

  • USD strength from US yields and fiscal concerns remains a macro driver.
  • MXN remains high-beta and sensitive to global risk sentiment swings.
  • While Mexico’s carry is attractive, growth headwinds and US trade dependency create vulnerabilities.
  • Tactical USD/MXN long positioning justified on asymmetric USD upside risks.

‍

10. EUR/PLN — Short

Macro Reasoning:

  • Central European growth is stabilizing, benefiting PLN.
  • EUR inflows into the eurozone support PLN via trade and investment links.
  • As EURUSD holds firm, PLN gains from improving local fundamentals and EUR strength.
  • Tactical opportunity to short EUR/PLN on relative growth divergence and capital flows into CEE.

‍

11. Crude Oil (Brent) — Short

Macro Reasoning:

  • Supply risks are skewed to the upside with Iranian barrels potentially returning.
  • OPEC+ discipline is slipping marginally, while US production remains high.
  • Demand remains soft, with global growth stabilizing but not accelerating.
  • USD strength adds a cost headwind, capping oil upside.

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12. USD/ZAR — Long

Macro Reasoning:

  • South Africa faces persistent fiscal and structural challenges.
  • USD strength via yields and fiscal risks continues to pressure EMFX.
  • Risk-on sentiment is insufficient to support a sustained ZAR rally.
  • Tactical USDZAR longs benefit from macro divergence and limited ZAR-specific catalysts.

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13. EUR/CHF — Long

Macro Reasoning:

  • ECB’s cautious easing contrasts with SNB’s potential for further rate cuts or intervention.
  • CHF remains structurally overbought, while EUR benefits from diversification flows.
  • Global trade sentiment favors EUR over CHF in relative terms.
  • EURCHF is biased higher as capital flows stabilize and CHF demand cools.
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