The week was dominated by a single macro regime shift: oil's collapse on US-Iran ceasefire progress. Global equities ended the week at fresh highs as markets embraced a tentative US-Iran ceasefire deal, with the MSCI All Country World Index rising 0.4% to a record and the S&P 500 on track for a ninth consecutive weekly gain — a backdrop that has materially relaxed every Brent-linked invalidator across our short-USD book. Brent fell 1.2% to $92.60/bbl after reports of a proposed 60-day ceasefire extension and continued negotiations over Iran's nuclear programme, capping a ~19% monthly decline that flips the entire energy regime versus where USD/JPY and EUR/USD were priced last cycle. Dollar-yen remained near 159.30 after Tokyo inflation unexpectedly eased for a sixth consecutive month, keeping intervention risk alive while making the BoJ's normalisation path more difficult — directly extending the offside on our short USD/JPY and short GBP/JPY positions. Meanwhile, the kiwi rode a surprise hawkish RBNZ to the top of the leaderboard, and the Aussie shook off a soft inflation print to grind higher, vindicating both our long NZD/USD and short GBP/AUD theses in the same five sessions.
How our views are tracking
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Short USD/JPY — thesis weakened Tokyo CPI missed across the board and overnight index swaps had been pricing around an 80% probability of a hike to 1%, but with subsidies distorting headlines the BOJ's June case now rests heavily on inflation re-accelerating, pushing the catalyst from June to July and leaving the pair pinned near cycle highs. |
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Short USD/SGD — thesis unchanged Singapore April CPI softened modestly but the pair broke below the 1.2778 floor on softer PCE and the oil collapse — the first directionally favourable week in three, though the US CPI invalidator remains triggered from April. |
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Short EUR/SGD — thesis strengthened tactically, event risk rising The trade is +16 pips with structural integrity intact, but eurozone flash CPI will be eyed too as the ECB preps for a June rate hike — a hawkish delivery on June 11 would directly trigger our explicit invalidator. |
Invalidator watch
The Canada Q1 GDP invalidator on short USD/CAD has formally triggered: Canadian real GDP fell at a 0.1% annual rate in Q1, well below the consensus 1.5% growth forecast and the flash estimate, marking the second consecutive quarter of declines as Q4 was revised lower to -1.0% annualized. The trade requires review in the next full cycle. Offsetting this, every Brent-linked invalidator ($115 thresholds across USD/SGD, EUR/SGD, SGD/CHF and EUR/USD) has moved from Watch to Clear as oil collapsed to $91. Net: one trade formally broken, four trades structurally de-risked.
Next week
| Tue Jun 2 | Eurozone HICP flash (aggregate) | Affects: EUR/SGD, EUR/USD |
| Wed Jun 3 | US ISM Services PMI | Affects: USD/JPY, USD/SGD, EUR/USD |
| Thu Jun 4 | US-Iran ceasefire MoU sign-off window | Affects: Brent, all USD shorts |
| Fri Jun 5 | US May Non-Farm Payrolls | Affects: All USD pairs |
| Fri Jun 5 | Canada May Labour Force Survey | Affects: USD/CAD, CAD/SGD |
NFP is the dominant binary: US jobs data will take the spotlight as hawkish Fed soundbites grow, with eurozone flash CPI also eyed as the ECB preps for a June rate hike. A hot print compounds the Warsh-era hawkish repricing and pressures every short-USD position in the book; a cool print would finally hand our long EUR/USD and short USD/JPY trades a tailwind ahead of the June 11 ECB and the June 16-17 FOMC.
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