Daily Market Outlook, August 13, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Stocks reached a new peak as a steady US inflation report eased worries over prices and increased expectations for a Federal Reserve interest rate cut in September. The MSCI All Country World Index rose by 0.2% to an all-time high, reflecting Wall Street's climb to record levels, with money markets nearly fully anticipating a 25 basis point Fed reduction next month. An index of Asian equities increased by 1.1%, with the Nikkei-225 hitting a new record and Taiwan's stock market also advancing. Shanghai stocks hit their highest point since December 2021. Japan's five-year government bond auction saw its lowest demand ratio since 2020, while the Yen declined by 0.1%. Treasuries and the Dollar index remained stable. Though US inflation rose to its peak for the year, a modest rise in goods prices mitigated concerns that trade-related costs could lead to wider pricing issues. With the CPI report now behind them, investors are turning their attention to Friday's US retail sales data for indications that consumer sentiment aligns with the positive corporate earnings outlook.
The July CPI data brought little in the way of surprises. The headline inflation rate increased by 0.2% month-over-month (m/m), while the core rate rose by 0.3% m/m. On an annual basis, the headline rate held steady at 2.7% year-over-year (y/y), though this figure is skewed by energy price effects. Adjusting for these, the core rate climbed 0.2 percentage points to 3.1% y/y. Insights into tariff impacts and their influence on resolving divisions within the Federal Open Market Committee (FOMC) remained inconclusive. However, those advocating for a September rate cut may find some support in the data, as tariff-driven inflation does not appear to be exerting significant pressure. For example, the "supercore" services CPI—largely domestic and less reliant on imports—rose 0.5% m/m, while core goods CPI, which is more import-intensive, increased by only 0.2% m/m. While item-specific observations on tariff effects varied, the overall picture makes it challenging to draw firm conclusions about tariffs' role in shaping July’s inflation trends. Hawks, however, may argue for holding rates steady in September, pointing to the persistently high annual inflation rates. Both core goods and supercore services inflation remain above their long-term averages, which could justify caution. Despite this, market sentiment overwhelmingly anticipates a September rate cut, likely hinging on upcoming data points: the employment report on September 5 and the annual benchmark revisions on September 9, which could reinforce concerns stemming from last month's weak jobs data.
Overnight Headlines
Putin, Kim Jong Un Share Info Ahead Of Trump Summit In Alaska
Sec Rubio Speaks With Russia’s Lavrov Before Trump-Putin Meeting
Trump Tells Goldman CEO To Replace Economist Over Tariff Predictions
China To Hit Canadian Canola With 76% Tariff As Trade Row Escalates
Panama Canal To Enter Ports Business As Trump-China Feud Simmers
Sumitomo Forestry Buys US Sawmill To Build Tariff-Resilient Supply Chain
Trsy’s Bessent Hints Fed Should Be Open To Half-Point Rate Cut
Trump Advisers Consider Changes To How Govt Collects Jobs Data
Hong Kong’s Made-In-China Deals Bonanza Risks US Backlash
Treasury Chief: US, Chinese Trade Teams To Meet Again In 2 To 3 Months
Australia’s CBA Posts Record A$10.25B Full-Year Profit On Lending Growth
Australia’s Treasury Wine Estates Posts Above 15% Rise In Annual Profit
Japan’s NTT Data Ties Up With Google For AI Agents
Japanese Automakers Brace For Trump’s ‘New Normal’ 15% Tariffs
Bankrupt Property Developer Evergrande To Delist From HK Exchange
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 6440 Target 6500
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!