NZD/USD Analysis: New Hawkish Split Shocks the Market
NZD/USD rallied after the RBNZ delivered its most hawkish hold in years. The bank kept rates at 2.25% as expected, but the board split 3-3 on whether to hike — a result the market did not anticipate.
The RBNZ revised its OCR projection to 2.84% by December, up from 2.4%, and 3.15% by end-2027. Markets responded immediately — July hike probability surged to approximately 75%, with 3.0% fully priced by year-end. Rising energy costs were cited as the primary upside risk to the inflation outlook.
The shift in guidance is material. A projected 75bps of tightening by December transforms New Zealand's rate path from neutral to actively hawkish — a repricing that, if sustained, should provide a floor under the kiwi.
read the full article here.
— Alan
NZD/USD rallied after the RBNZ delivered its most hawkish hold in years. The bank kept rates at 2.25% as expected, but the board split 3-3 on whether to hike — a result the market did not anticipate.
The RBNZ revised its OCR projection to 2.84% by December, up from 2.4%, and 3.15% by end-2027. Markets responded immediately — July hike probability surged to approximately 75%, with 3.0% fully priced by year-end. Rising energy costs were cited as the primary upside risk to the inflation outlook.
The shift in guidance is material. A projected 75bps of tightening by December transforms New Zealand's rate path from neutral to actively hawkish — a repricing that, if sustained, should provide a floor under the kiwi.
read the full article here.
— Alan
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Gold Forecast: The Setup Is Now Here — Watch Out For This
Gold at ~$4,400, and it has arrived. The support zone I've been watching for weeks is now being tested, with the 200-day SMA converging precisely at this level.
A draft MoU framework is emerging between the US and Iran. Tehran has reportedly committed to restoring Hormuz shipping to pre-war levels within one month. If that translates into lower oil, softening yields, and a retreating dollar, gold finds the macro tailwind it has been missing for three months.
The other side remains equally valid. If yields stay elevated, inflation fears persist, and the Fed's hike pricing firms further — currently at 25bps by year-end — this support breaks. And a failed level of this magnitude produces violent continuation lower.
Now is the time to watch gold closely. The EdgeFinder is currently returning a neutral reading. A shift to green would be the confirmation that macro conditions are aligning with the technical setup.
read the full article here.
— Alan
Gold at ~$4,400, and it has arrived. The support zone I've been watching for weeks is now being tested, with the 200-day SMA converging precisely at this level.
A draft MoU framework is emerging between the US and Iran. Tehran has reportedly committed to restoring Hormuz shipping to pre-war levels within one month. If that translates into lower oil, softening yields, and a retreating dollar, gold finds the macro tailwind it has been missing for three months.
The other side remains equally valid. If yields stay elevated, inflation fears persist, and the Fed's hike pricing firms further — currently at 25bps by year-end — this support breaks. And a failed level of this magnitude produces violent continuation lower.
Now is the time to watch gold closely. The EdgeFinder is currently returning a neutral reading. A shift to green would be the confirmation that macro conditions are aligning with the technical setup.
read the full article here.
— Alan
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🔔 Closing Bell - Question of the Day
During financial crises, correlations between asset classes often spike toward 1.0. Why is this dangerous for diversified portfolios?
During financial crises, correlations between asset classes often spike toward 1.0. Why is this dangerous for diversified portfolios?
Anonymous Quiz
13%
Rising correlations improve diversification — more assets move together in a profitable direction
75%
Assets that normally offset each other sell off simultaneously. The diversification benefit dwindles
6%
Correlations remain perfectly stable through every market environment without exception
5%
Only equities experience correlation shifts — bonds and commodities are unaffected.
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My official "tier list" for trading strategies that I think can be most profitable...
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- Nick
View Tier list
- Nick
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DXY Analysis: Softer PCE and Iran Deal Pressures the Dollar
DXY is pulling back from the 99.50 resistance zone after dual catalysts — softer-than-expected PCE data and reports that the US and Iran have reached a 60-day MOU framework, pending Trump's final approval.
April PCE came in below expectations — headline at 0.4% MoM and core at 0.2% — but annual rates remain elevated at 3.8% and 3.3% respectively, both well above the Fed's target. The softer monthly read provides temporary relief, but the annual figures confirm that inflation has not meaningfully retreated.
The MOU, if signed, would extend the ceasefire by 60 days and launch nuclear negotiations. Oil dropped to $88.93 on the headline. A resolution is constructive for the inflation trajectory longer-term, but the disinflation lag means the impact is not immediate.
In my view, short-term pressure on DXY is expected. But sticky inflation and elevated yields should attract buyers.
read the full article here.
— Alan
DXY is pulling back from the 99.50 resistance zone after dual catalysts — softer-than-expected PCE data and reports that the US and Iran have reached a 60-day MOU framework, pending Trump's final approval.
April PCE came in below expectations — headline at 0.4% MoM and core at 0.2% — but annual rates remain elevated at 3.8% and 3.3% respectively, both well above the Fed's target. The softer monthly read provides temporary relief, but the annual figures confirm that inflation has not meaningfully retreated.
The MOU, if signed, would extend the ceasefire by 60 days and launch nuclear negotiations. Oil dropped to $88.93 on the headline. A resolution is constructive for the inflation trajectory longer-term, but the disinflation lag means the impact is not immediate.
In my view, short-term pressure on DXY is expected. But sticky inflation and elevated yields should attract buyers.
read the full article here.
— Alan
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USD/CAD Analysis: Pullback Now Creates Opportunity Near 1.3700
USD/CAD is starting to pull back as the Iran MOU framework and softer PCE data reduce some of the dollar's safe-haven premium.
The pullback is expected if the war resolution gains traction — some of the USD safe-haven bid will get priced out. However, in my view, a retreat toward the 1.3700 level would represent a compelling area to re-engage the long side. The fundamental case for USD outperformance versus CAD remains intact.
Canadian rate hike pricing has fallen to 34bps this year from 54bps after last week's cooler CPI. The BoC is anchored at 2.25% with limited urgency to tighten unless oil remains elevated. USMCA renegotiation risk adds an additional CAD headwind.. the US is taking a harder line on Canada than Mexico despite a significantly smaller trade deficit.
Over the long-term, the macro backdrop still favors the dollar over the cad.
read the full article here.
— Alan
USD/CAD is starting to pull back as the Iran MOU framework and softer PCE data reduce some of the dollar's safe-haven premium.
The pullback is expected if the war resolution gains traction — some of the USD safe-haven bid will get priced out. However, in my view, a retreat toward the 1.3700 level would represent a compelling area to re-engage the long side. The fundamental case for USD outperformance versus CAD remains intact.
Canadian rate hike pricing has fallen to 34bps this year from 54bps after last week's cooler CPI. The BoC is anchored at 2.25% with limited urgency to tighten unless oil remains elevated. USMCA renegotiation risk adds an additional CAD headwind.. the US is taking a harder line on Canada than Mexico despite a significantly smaller trade deficit.
Over the long-term, the macro backdrop still favors the dollar over the cad.
read the full article here.
— Alan
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🔔 Closing Bell - Question of the Day
When political pressure forces a central bank to keep rates lower than inflation warrants, what is the typical macro consequence?
When political pressure forces a central bank to keep rates lower than inflation warrants, what is the typical macro consequence?
Anonymous Quiz
73%
Inflation expectations de-anchor — the currency weakens and real purchasing power erodes over time
8%
Political influence over rate decisions has no measurable impact on inflation or currency stability
11%
Central bank independence is symbolic — removing it produces identical policy outcomes
8%
Lower rates always produce sustained growth with no inflationary side effects
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S&P 500 Analysis: New Record High on Iran Deal Optimism
S&P 500 at new all-time highs, nothing unusual in this environment. The index has cleared every prior resistance level and is now trading in uncharted territory. The VIX dropped to its lowest since January, reflecting a broad compression in perceived risk as the US-Iran MOU approaches formal approval.
The preliminary deal framework between Washington and Tehran has shifted market psychology from hedging war risk to pricing a post-conflict environment. If the deal is formalized, the inflation impulse that has constrained central banks for three months begins to unwind.
The tension, however, has not disappeared. PCE inflation printed at a three-year high yesterday. Annual core PCE at 3.3% remains well above the Fed's target. Q1 GDP was revised lower. The S&P is pricing in peace and peak earnings while the macro data has not yet confirmed the shift.
read the full article here.
— Alan
S&P 500 at new all-time highs, nothing unusual in this environment. The index has cleared every prior resistance level and is now trading in uncharted territory. The VIX dropped to its lowest since January, reflecting a broad compression in perceived risk as the US-Iran MOU approaches formal approval.
The preliminary deal framework between Washington and Tehran has shifted market psychology from hedging war risk to pricing a post-conflict environment. If the deal is formalized, the inflation impulse that has constrained central banks for three months begins to unwind.
The tension, however, has not disappeared. PCE inflation printed at a three-year high yesterday. Annual core PCE at 3.3% remains well above the Fed's target. Q1 GDP was revised lower. The S&P is pricing in peace and peak earnings while the macro data has not yet confirmed the shift.
read the full article here.
— Alan
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NZD/USD Analysis: How Hawkish Is the RBNZ really?
NZD/USD pressing just below 0.6000, up nearly 1% today and 2.7% in three sessions — the sharpest rally in months. The pair is now testing the psychological level of 0.6000.
The RBNZ's stance is verified and material. The 3-3 split required Governor Breman's casting vote to hold. All six members agreed hikes are coming — the debate is only on timing. The OCR projection was lifted to 2.84% by December, with inflation expected to peak near 4.3% later this year.
The critical question: can the economy absorb it? GDP forecasts have been slashed to 1.8–2.0% from 2.8% just three months ago. Unemployment is at the lower-5% range. The RBNZ is preparing to tighten into a slowing economy.
Breman said: even if the war ends tomorrow, inflationary effects persist. The hike cycle is coming regardless. What differs is how far — ASB sees 3.25%, Westpac sees 4.0%+. The range of outcomes is unusually wide.
read the full article here.
— Alan
NZD/USD pressing just below 0.6000, up nearly 1% today and 2.7% in three sessions — the sharpest rally in months. The pair is now testing the psychological level of 0.6000.
The RBNZ's stance is verified and material. The 3-3 split required Governor Breman's casting vote to hold. All six members agreed hikes are coming — the debate is only on timing. The OCR projection was lifted to 2.84% by December, with inflation expected to peak near 4.3% later this year.
The critical question: can the economy absorb it? GDP forecasts have been slashed to 1.8–2.0% from 2.8% just three months ago. Unemployment is at the lower-5% range. The RBNZ is preparing to tighten into a slowing economy.
Breman said: even if the war ends tomorrow, inflationary effects persist. The hike cycle is coming regardless. What differs is how far — ASB sees 3.25%, Westpac sees 4.0%+. The range of outcomes is unusually wide.
read the full article here.
— Alan
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🔔 Closing Bell - Question of the Day
The spread on a forex pair represents:
The spread on a forex pair represents:
Anonymous Quiz
29%
The difference between the bid and ask price — the broker's guaranteed profit on every trade
5%
The difference between the bid and ask price — a fixed amount that doesn't change.
25%
The difference between the bid and ask price — a fee only charged when entering a position.
40%
The difference between the bid and ask price — your implicit cost to executing trades.
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OIL Analysis: 7% Surge as Peace Deal Framework Now Stalled
WTI surging 7% after Iran suspended all negotiations with the US, citing Israeli airstrikes in Lebanon as a breach of ceasefire preconditions. The MOU framework that had pulled oil toward $85 last week is now in jeopardy. One headline erased a week of deal optimism.
Oil had been drifting toward the $85 pre-war floor on peace expectations — yields eased, risk assets rallied, gold found a bid. Today's reversal demonstrates how fragile that repricing was.
Iran's Tasnim agency confirmed the negotiating team will halt all document exchanges through mediators. Foreign Ministry spokesperson Baghaei said Iran remains engaged but with "distrust." All meanwhile Trump maintains the deal will "work out well" narrative.
Three months above $85 has already embedded price pressures into wages, rents, and supply chains. Every additional week at these levels makes the disinflation process longer and more painful.
read the full article here.
— Alan
WTI surging 7% after Iran suspended all negotiations with the US, citing Israeli airstrikes in Lebanon as a breach of ceasefire preconditions. The MOU framework that had pulled oil toward $85 last week is now in jeopardy. One headline erased a week of deal optimism.
Oil had been drifting toward the $85 pre-war floor on peace expectations — yields eased, risk assets rallied, gold found a bid. Today's reversal demonstrates how fragile that repricing was.
Iran's Tasnim agency confirmed the negotiating team will halt all document exchanges through mediators. Foreign Ministry spokesperson Baghaei said Iran remains engaged but with "distrust." All meanwhile Trump maintains the deal will "work out well" narrative.
Three months above $85 has already embedded price pressures into wages, rents, and supply chains. Every additional week at these levels makes the disinflation process longer and more painful.
read the full article here.
— Alan
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Bonds Analysis: Yields Are Very Sensitive Right Now
The 10-year at 4.508%, posting its largest daily jump in two weeks after Iran halted all US negotiations. The 30-year reclaimed 5.02%. The 2-year — most sensitive to rate expectations — surged 6.8bps to 4.08%. The entire curve is repricing higher as the deal framework collapses.
Yields were near 3.95% when the war started. Three months later they sit 55 basis points higher, driven entirely by the inflationary impulse from elevated oil. Last week's retreat on peace optimism has been fully reversed in a single session.
ISM Manufacturing PMI at 54.0 — the highest since May 2022 — reinforced the hawkish backdrop. But as Bryn Mawr's Barnes noted, today's data is overshadowed by the geopolitical deterioration.
Fed hike odds have are at 40% for December and up from two cuts priced at the start of the year. We went from rate cuts to rate hikes, driven entirely by the price of oil.
read the full article here.
— Alan
The 10-year at 4.508%, posting its largest daily jump in two weeks after Iran halted all US negotiations. The 30-year reclaimed 5.02%. The 2-year — most sensitive to rate expectations — surged 6.8bps to 4.08%. The entire curve is repricing higher as the deal framework collapses.
Yields were near 3.95% when the war started. Three months later they sit 55 basis points higher, driven entirely by the inflationary impulse from elevated oil. Last week's retreat on peace optimism has been fully reversed in a single session.
ISM Manufacturing PMI at 54.0 — the highest since May 2022 — reinforced the hawkish backdrop. But as Bryn Mawr's Barnes noted, today's data is overshadowed by the geopolitical deterioration.
Fed hike odds have are at 40% for December and up from two cuts priced at the start of the year. We went from rate cuts to rate hikes, driven entirely by the price of oil.
read the full article here.
— Alan
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🔔 Closing Bell - Question of the Day
Why is trading directly into a high-impact news release considered risky?
Why is trading directly into a high-impact news release considered risky?
Anonymous Quiz
1%
News events have no effect on price — volatility stays constant
6%
Every news release moves price in a single predictable direction without exception
1%
Only limit orders execute during news — market orders are completely disabled
91%
Spreads widen, liquidity thins, and price can gap or whipsaw — making execution unpredictable
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Media is too big
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USD/JPY Analysis: The ¥11.7T Intervention Was No Good
USD/JPY is pressing back into the intervention zone for the third time since April. Data confirmed Japan spent ¥11.7 trillion defending the yen in April. And all that came was a temporary pullback to 155 that has been entirely reversed.
The Fed at 3.75% versus the BoJ at 0.75% creates a 300-basis-point yield gap that pulls USD/JPY higher through the carry trade. Japan is spending reserves to delay a move that fundamentals continue to support.
Finance Minister Katayama reiterated that authorities stand ready to act and are in close communication with Washington. Markets are monitoring, but the verbal warnings have diminishing impact each time the pair reclaims the same levels.
The BoJ meeting on June 15–16 is now the key variable. Markets price a 78% probability of a hike, which would narrow the differential to 275bps. That alone is not sufficient enough to reverse the trend, but it would reduce the carry incentive.
read the full article here.
— Alan
USD/JPY is pressing back into the intervention zone for the third time since April. Data confirmed Japan spent ¥11.7 trillion defending the yen in April. And all that came was a temporary pullback to 155 that has been entirely reversed.
The Fed at 3.75% versus the BoJ at 0.75% creates a 300-basis-point yield gap that pulls USD/JPY higher through the carry trade. Japan is spending reserves to delay a move that fundamentals continue to support.
Finance Minister Katayama reiterated that authorities stand ready to act and are in close communication with Washington. Markets are monitoring, but the verbal warnings have diminishing impact each time the pair reclaims the same levels.
The BoJ meeting on June 15–16 is now the key variable. Markets price a 78% probability of a hike, which would narrow the differential to 275bps. That alone is not sufficient enough to reverse the trend, but it would reduce the carry incentive.
read the full article here.
— Alan
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