Daily Market Outlook, August 12, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Stocks increased as investor confidence rose after President Donald Trump expressed openness to allowing US companies to resume some chip sales to China and prolonged a trade truce with Beijing. The MSCI index of Asian shares went up by 0.6%, reducing some earlier gains after China advised local companies against using Nvidia Corp.'s H20 processors. Earlier, Trump indicated he would consider permitting Nvidia to sell a limited version of its most advanced AI chip to China. Asian technology shares experienced an upswing on Tuesday, particularly among chipmakers like Advantest. Sentiment was bolstered by Micron Technology Inc.’s optimistic outlook and indications of reduced tensions at Intel Corp. Japan’s Nikkei-225 index stood out, climbing 2.4% to reach a record high as Softbank soared. The yen declined for the third straight session while a measure of the dollar fell by 0.1%. Futures for European equities rose by 0.5%, while US futures remained flat, retracting some of their gains following China's directive. Trump’s decision regarding chip exports helped alleviate market worries about escalating technology sanctions and possible supply-chain disruptions. Investors were also comforted by the continuation of the tariff truce with China, which eliminated a major source of uncertainty ahead of US inflation data expected later on Tuesday. Meanwhile, China advised local businesses to steer clear of Nvidia's H20 processors, especially for government-related applications, complicating the chipmaker’s efforts to recover billions in lost revenue from China and the Trump administration’s unprecedented drive to convert those sales into a financial gain for the US government. Regarding trade, Trump has extended the pause on steep tariffs on Chinese imports until November 10, stabilizing trade relations between the two largest economies in the world. The tariff increase had been scheduled for Tuesday.
This morning's update from the ONS on the jobs market is unlikely to significantly shift market expectations regarding BoE policy. Regular pay growth in the private sector stood at 4.8% year-on-year for the three months to June, aligning with forecasts, as did other earnings measures. This suggests only a modest easing of 0.2 percentage points is required to meet the Q3 target of 4.6% year-on-year set by the MPC in last week’s August Monetary Policy Report. Therefore, the moderation in pay growth doesn’t appear to pose a hurdle to further policy easing.On the employment front, the Labour Force Survey reported a gain of 238k jobs for Q2 over the previous three months, exceeding expectations. However, the ONS commentary highlights ongoing data quality concerns and points to the more timely HMRC payroll employment series, which showed a decline of 8k month-on-month for July. This contraction was less severe than the anticipated 20k drop, and June’s decline was partially revised, now recorded at -26k instead of the original -41k. While employment is falling, the pace of decline is less pronounced than what many survey indicators had suggested. In summary, for the BoE, the data suggests emerging slack in the labor market alongside pay growth moderation tracking in line with expectations. Ultimately, forthcoming policy decisions will hinge on whether CPI inflation meets or misses targets, given the persistent concerns over elevated inflation expectations.
An upside surprise in July's CPI data would highlight the disconnect between persistent price pressures and a softer labor market, complicating the September FOMC decision. A milder headline rate (0.2% m/m expected) versus core (0.3% m/m expected) reflects subdued energy prices but rising tariff-related goods costs. Inflation's shift towards acyclical components supports hawkish policy, as even higher unemployment may not fully ease inflation. However, if the labor market's annual benchmark revisions on September 9 show significant weakness, dovish arguments could gain traction.
Overnight Headlines
US, China Extend Tariff Truce By 90 Days, Staving Off Surge In Duties
Trump Names Heritage’s EJ Antoni To Lead Bureau Of Labor Statistics
RBA 25bps Cuts; Downgrades ECN Outlook, Productivity Speed Limit
Trump Defends Taking 15% Cut Of Nvidia, AMD Chip Sales To China
Trump Says Gold Imports Will Not Face US Tariffs
Pacifist Japan Takes Big Step Towards Becoming Major Arms Exporter
HSBC Flags 73% Of Hong Kong Commercial Property Loans As Risky
Japan’s Nikkei Hits Record High As Global Trade Outlook Improves
Ultra Wealthy Are Piling Into A Centuries-Old Gold Trade In Asia
Ford’s New Line Of Affordable EVs To Start At About $30,000
Google And IBM Believe First Workable Quantum Computer Is In Sight
Europe Builds For War As Arms Factories Expand At Triple Speed
Rheinmetall Chief: Tanks To Get Cheaper Despite Defence Spending Surge
Banks Consider Seizing Hong Kong’s Worfu Mall After Loan Default
Musk Accuses Apple Of Antitrust Violation, Says xAI Will Take Legal Action
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1500 (2.3BLN), 1.1535-40 (559M), 1.1545-60 (2.4BLN)
1.1575 (1.1BLN), 1.1600 (477M), 1.1650 (1.5BLN), 1.1675-85 (627M)
USD/CHF: 0.8035 (300M), 0.8135-40 (466M), 0.8200 (300M)
EUR/GBP: 0.8650 (362M). GBP/USD: 1.3400 (190M)
AUD/USD: 0.6500 (430M), 0.6525 (251M), 0.6565-75 (1.6BLN)
USD/CAD: 1.3750 (1.1BLN), 1.3785 (772M)
USD/JPY: 147.30 (1.1BLN), 147.45-50 (1BLN), 148.15-25 (500M)
EUR/JPY: 170.35 (238M)
CFTC Positions as of the Week Ending August 8
Equity fund speculators have reduced their net short position in S&P 500 CME by 40,918 contracts, bringing the total to 322,114. Meanwhile, equity fund managers have decreased their net long position in S&P 500 CME by 29,005 contracts, now totaling 840,636.
Speculators have also raised their net short position in CBOT US 5-year Treasury futures by 24,994 contracts to 2,536,877. For CBOT US 10-year Treasury futures, the net short position increased by 63,204 contracts, reaching 959,834. Similarly, the net short position in CBOT US 2-year Treasury futures was elevated by 122,286 contracts to 1,325,523. The CBOT US UltraBond Treasury futures net short position rose by 11,554 contracts, totaling 228,367. Conversely, speculators slightly decreased the net short position in CBOT US Treasury bonds futures by 363 contracts to 110,440.
The net short position for Bitcoin sits at -1,501 contracts. The Swiss franc has a net short position of -27,377 contracts, while the British pound has a net short position of -33,303 contracts. The euro boasts a net long position of 115,959 contracts, and the Japanese yen has a net long position of 82,006 contracts. Speculators have cut their bearish bets on the dollar to the lowest level in four months..
Technical & Trade Views
SP500
Daily VWAP Bullish Above 6340 Target 6430
Weekly VWAP Bearish Above 6300 Target 6150
EURUSD
Daily VWAP Bearish Below 1.17 Target 1.15
Weekly VWAP Bearish Below 1.1640 Target 1.14
GBPUSD
Daily VWAP Bullish above 1.3260 Target 1.34
Weekly VWAP Bearish Below 1.3360 Target 1.3050
USDJPY
Daily VWAP Bearish Below 1.4880 Target 1.45
Weekly VWAP Bearish Below 1.4770 Target 1.45
XAUUSD
Daily VWAP Bearish Below 3380 Target 3320
Weekly VWAP Bullish Above 3350 Target 3600
BTCUSD
Daily VWAP Bullish Above 120k Target 130k
Weekly VWAP Bearish Below 118k Target 110k
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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!