Daily Market Outlook, May 5, 2026
Daily Market Outlook, May 5, 2026
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Risk is coming off the highs as the market is forced to reprice the inflationary tail of the US/Iran shock. Asia was softer despite thin holiday liquidity, with the MSCI Asia Pacific -0.5% after Wall Street faded from record levels as Brent surged above $115/bbl. Crude has eased modestly in Asia — Brent -0.9% near $113.50 — helping US equity futures +0.2%, but that is only partial relief after Monday’s near 6% spike. The dollar is firmer across G10 as the Middle East safe-haven bid reasserts itself; gold has bounced back toward $4,550/oz, and USD/JPY is hovering just above 157, near the 100-day moving average after last week’s intervention. The broader message is that equities can still lean on earnings momentum, but the oil/rates combination is again dictating the macro ceiling for risk. Versus Friday’s close, the Treasury curve has bear-steepened 5–7bps, with the 10Y around 4.43%, close to the March peak, while Treasury refunding details added supply pressure with Q2 borrowing needs revised up to $189bn and Q3 borrowing projected at $671bn.
Central bank divergence is becoming cleaner. ECB officials are still leaning hard into a June hike after last week’s meeting, with Kazimir saying tightening in June is “all but inevitable” and Nagel arguing that even no improvement in the inflation outlook would justify moving. The ECB is treating the energy shock as an inflation-risk problem first and a growth problem second. The Fed, by contrast, remains more reluctant to validate hikes, with Williams saying he sees no current argument for raising rates and that policy will need to be lower “at some point.” That creates an uneasy cross-market setup: the dollar has near-term support from safe-haven demand and higher US yields, but the Fed is less hawkish at the margin than the ECB and now the RBA. The eurozone faces the clearest stagflation risk, but the policy message is still more forceful than the Fed’s, which should keep front-end rate differentials and EUR crosses in focus.
The RBA delivered the cleanest hawkish signal, hiking 25bps to 4.35% in an 8–1 vote, its third consecutive increase, while retaining a tightening bias despite forecasts showing weaker growth and higher unemployment. Bullock described policy as now somewhat restrictive, but the Board is clearly focused on preventing the Iran-driven energy shock from generating second-round effects from an already elevated Australian inflation starting point. That is the key distinction versus other major central banks: Australia entered the shock with a visibly less comfortable inflation profile, so the RBA is choosing a more direct and credible response, with scope to unwind later if the profile improves. The trade-off is uncomfortable, but markets should reward the proactive stance: it supports AUD on dips, reinforces relative RBA hawkishness, and makes Australia one of the cleaner expressions of central banks willing to lean against embedded inflation risk rather than hope the shock fades.
Overnight Headlines
RBA Delivers Third Straight Rate Hike, Cementing Outlier Status
Two US Navy Destroyers Transit The Straits Of Hormuz
Maersk Vessel Exits Persian Gulf Under US Military Escort
South Korea Says Its Ship Damaged In Hormuz For First Time
US Driller Diamondback Raising Output ‘Immediately’ On Oil Rally
Europe Is Facing Stagflationary Shock, EU’s Dombrovskis Says
BoC Gov Vows Action If High Energy Price Effects Spread
Pimco Clients Seek To Diversify Away From US Assets
Palantir Issues Strong Revenue Outlook, Misses On Commercial Sales
Rheinmetall Sales Miss Estimates As Revenues Shift Into Q2
Westpac Profit Misses Estimates As CEO Flags Mideast Risks
HSBC Profit Misses On Charges Related To The UK, Middle East
Meta Taps Morgan Stanley, JPMorgan For Data Centre Deal
Apple Explores Using Intel, Samsung To Build Chips In The US
China Targets 70% Domestic Advanced Silicon Wafer Use By 2026
Bitcoin Tests $80,000 As Momentum Moderates
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
EUR/USD: 1.1800 (EU2.06b), 1.1750 (EU1.19b), 1.2300 (EU1.1b)
AUD/USD: 0.7200 (AUD567.1m), 0.7100 (AUD511.1m), 0.7025 (AUD510.9m)
USD/JPY: 160.35 ($554.3m), 159.00 ($410.7m)
GBP/USD: 1.3575 (GBP454.3m), 1.3670 (GBP386.2m), 1.3330 (GBP370.2m)
USD/CAD: 1.3700 ($604.1m), 1.3615 ($400m), 1.3580 ($333m)
USD/BRL: 5.3800 ($484.8m), 4.9600 ($345.2m), 5.5800 ($322m)
NZD/USD: 0.5900 (NZD352.9m)
EUR/GBP: 0.8550 (EU438.6m)
CFTC Positions as of May 1, 2026:
Equity fund speculators reduced their net short position in the S&P 500 CME by 5,811 contracts, totaling 396,442. Meanwhile, equity fund managers decreased their net long position by 21,368 contracts to 999,182.
Speculators also adjusted their positions in Treasury futures: they cut the net short position in 5-year futures by 11,345 contracts (1,521,405 total), increased the net short position in 10-year futures by 48,166 contracts (839,137 total), trimmed the 2-year net short position by 34,090 contracts (1,709,263 total), and reduced the UltraBond net short position by 6,002 contracts (294,285 total). In contrast, they raised the net short position in Treasury bonds by 29,869 contracts (113,655 total).
Bitcoin's net long position stands at 2,392 contracts. The Swiss franc shows a net short position of -35,221 contracts, the British pound -60,639 contracts, the euro has a net long position of 35,712 contracts, and the Japanese yen has a net short position of -102,059 contracts.
Technical & Trade Views
SP500
Daily VWAP Bullish
Weekly VWAP Bullish
Above 7100 Target 7300
Below 7050 Target 6950
DXY
Daily VWAP Bullish
Weekly VWAP Bearish
Above 98.85 Target 99.50
Below 98.50 Target 96.12
EURUSD
Daily VWAP Bearish
Weekly VWAP Bullish
Above 1.1785 Target 1.18.50
Below 1.1750 Target 1.1590
GBPUSD
Daily VWAP Bearish
Weekly VWAP Bullish
Above 1.3445 Target 1.38.85
Below 1.34 Target 1.3320
USDJPY
Daily VWAP Bearish
Weekly VWAP Bearish
Above 160 Target 161
Below 159 Target 152
XAUUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 4600 Target 5000
Below 42700 Target 3600
BTCUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 82.5k Target 80k
Below 81k Target 85.9k
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!