Daily Market Outlook, August 20, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Global markets took a breather following a record-setting streak, with a significant selloff in major technology stocks pulling indices down, and futures suggesting more decreases ahead.
Nasdaq 100 index futures fell 0.5% after the index experienced its second-largest decline since the tariff impact in April, driven by a shift in stocks. S&P 500 futures dropped 0.3%, while European stock futures fell 0.7%, following a significant drop in Asian markets, the largest in over two weeks. Taiwan Semiconductor Manufacturing and SoftBank were among those leading the downturn. Oil prices increased, recovering some of the previous session's losses. The dollar strengthened for a third consecutive day. The New Zealand dollar decreased in value, and bonds saw a rise following the central bank's decision to lower interest rates by 25 basis points, indicating potential for additional reductions. Investors reduced their holdings in technology stocks, which have been market leaders for an extended period, amid concerns that the rally since April may have progressed too far too quickly. This week, that momentum will be further challenged as attention shifts to Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell is scheduled to speak on Friday, and traders are solidifying their expectations for a rate cut in September.
UK inflation in July surprised to the upside, with headline inflation rising +0.1% m/m (median forecast 0.0%), pushing the annual rate to 3.8% from 3.6% (survey 3.7%). Core inflation also increased to 3.8% y/y, while services inflation climbed to 5.0% from 4.7%, exceeding market expectations of 4.8%. Despite this surprise, the figures align closely with the Bank of England's latest Monetary Policy Report projections, which anticipated 3.8% headline inflation and 4.9% y/y for July. The tight August vote split (5-4) within the Monetary Policy Committee (MPC), with Chief Economist Huw Pill and Deputy Governor Clare Lombardelli opposing rate cuts, highlights discomfort with current price levels. Markets had already scaled back expectations for further rate cuts, suggesting that the inflation print may not provoke a significant negative reaction. Dovish members of the MPC may point to volatile components in the breakdown, but persistent food inflation and rising costs in hotels and restaurants—partly influenced by fiscal policy changes like higher National Insurance—pose challenges. Although goods inflation was negative m/m, annual price growth is accelerating. The risk remains that persistent price pressures could lead to renewed second-round effects, potentially undermining the MPC's assumptions of a significant cooling in wage pressures toward year-end.
Overnight Headlines
Trump Revokes Security Clearances Of 37 Current, FMR Govt Officials
RBNZ Cuts Rates To 3-Year Low, Flags More Easing; Kiwi Dollar Tumbles
Japan’s Exports Fall Most In Four Years As Tariff Pain Deepens
Europe Races To Leverage Trump’s Support For Ukraine Troop Plan
Powell To Deliver Jackson Hole Address Under Fire On Multiple Fronts
White House Aims To Fast-Track Key Federal Reserve Pick
Reeves Explores Housing Capital Gains Tax Reform; Budget Gap Widens
Chinese Stock Rally Broadens Out As Momentum Picks Up
US Tech Stocks Hit By Wave Of Concerns Over Future Of AI Boom
Tether Hires Former Head Of Trump’s Crypto Advisory Council
China Set To Tackle Petrochemicals Overcapacity With Overhaul
BP Says Whiting Refinery Operations Hit By Flooding
Mexico To Propose Joint Steel Committee With US To Bolster Ties
Canada Approves Ozempic To Cut Risk Of Kidney, Heart-Related Deaths
A 230% Rally In China’s E-Commerce Stock Faces Earnings Test
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
USD/JPY: 146.60 (200M), 146.75-80 (627M), 147.00-10 (814M)
147.25-35 (1.16BLN), 147.75 (340M), 147.90-05 (1.8BLN)
148.10 (251M), 148.60 (262M), 149.00 (833M)
EUR/JPY: 171.00 (706M)
USD/CHF: 0.7965-75 (383M). EUR/CHF: 0.9325 (260M)
GBP/USD: 1.3490-00 (1.03BLN). EUR/GBP: 0.8630 (264M)
0.8675 (224M)
AUD/USD: 0.6375 (200M), 0.6460 (397M), 0.6500 (249M)
0.6550 (278M), 0.6600 (412M)
NZD/USD: 0.5925 (400M), 0.5950 (558M), 0.6000 (406M)
USD/CAD: 1.3800 (2.3BLN), 1.3825-35 (547M), 1.3845-55 (461M)
CFTC Positions as of the Week Ending August 15
Speculators have reduced their net short position in CBOT US Treasury bonds futures by 49,646 contracts, bringing it down to 60,794. They have also decreased their net short position in CBOT US Ultrabond Treasury futures by 19,235 contracts to a total of 209,132. Additionally, speculators have lowered their net short position in CBOT US 10-year Treasury futures by 17,611 contracts, resulting in a position of 942,223. Conversely, there has been an increase in the net short positions for CBOT US 5-year and 2-year Treasury futures, by 29,492 contracts to 2,566,369 and by 54,074 contracts to 1,379,597, respectively.
Equity fund managers have raised their net long position in S&P 500 CME by 46,675 contracts, bringing it to 887,310, while equity fund speculators have increased their net short position by 74,016 contracts to a total of 396,132.
The net long position in Japanese yen stands at 74,234 contracts, and the euro has a net long position of 115,431 contracts. On the other hand, the British pound has a net short position of -39,093 contracts, and the Swiss franc shows a net short position of -28,043 contracts. Lastly, Bitcoin’s net short position is recorded at -742 contracts...
Technical & Trade Views
SP500
Daily VWAP Bearish Above 6440 Target 6500
Weekly VWAP Bullish Above 6300 Target 6150
EURUSD
Daily VWAP Bullish Below 1.17 Target 1.15
Weekly VWAP Bullish Below 1.1640 Target 1.14
GBPUSD
Daily VWAP Bullish above 1.3260 Target 1.34
Weekly VWAP Bullish Below 1.3360 Target 1.3050
USDJPY
Daily VWAP Bullish 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 Bearish Above 3350 Target 3600
BTCUSD
Daily VWAP Bearish Below 116k Target 110k
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!