Daily Market Outlook, August 26, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

The dollar recovered most of its declines after Federal Reserve Governor Lisa Cook announced she would not resign following President Donald Trump's attempt to remove her. The dollar's value fell by as much as 0.3%, while gold prices increased by as much as 0.6% after Trump declared on his Truth Social account that Cook would be dismissed immediately. However, the dollar later regained some strength, and gold's gains were reduced after Cook affirmed her intention to remain in position. Asian stocks dipped by 0.7%, and equity-index futures for the US and Europe also declined. The Treasury curve steepened, with a decrease in two-year yields indicating mounting speculation about a potential Fed interest-rate cut as early as next month, while 30-year yields rose due to worries that a more lenient monetary policy could fuel inflation. French bond futures began trading lower in Asia. Trump's actions have contributed to a negative outlook on US assets, following his tariff policies and increasing deficit, which earlier this year sparked a "Sell America" sentiment and led Wall Street to question the concept of US exceptionalism. Traders have begun looking for alternatives to the dollar and Treasuries, and any perceived loss of Fed independence might hasten this trend. Trump's announcement followed the US Department of Justice's intention to investigate Cook, triggered by a criminal referral from Federal Housing Finance Agency Director Bill Pulte, who suggested she might have engaged in mortgage fraud. This investigation is part of a broader strategy by the Trump administration to heighten legal scrutiny of Democratic figures and apply pressure on the central bank. Cook stated that Trump lacks the authority to terminate her position, and she has no plans to resign. Her attorney, Abbe Lowell, mentioned they would take "whatever actions are needed to prevent" Trump's "illegal action.". In addition to the Fed showdown, Trump continued to make headlines by issuing new tariff threats against nations implementing digital taxes, creating another challenge for the European Union. Sources indicated earlier that the Trump administration is contemplating sanctions on EU officials or member state representatives involved in enforcing the bloc's significant Digital Services Act. Today’s data calendar is sparse. Meanwhile, the markets are focused on Nvidia's quarterly earnings report set for Wednesday, which is a crucial assessment of the booming artificial intelligence sector.

A shorter week after the UK holiday, but still plenty to unpack. The UK calendar is relatively light, with the Lloyds Business Barometer (Friday) standing out as an indicator of improving conditions. This aligns with last week’s PMI data, which also pointed to better trends. Another positive uptick in this survey seems likely. In the Eurozone, Thursday brings key data on money, credit, and confidence, along with early August inflation figures from France, Germany, Italy, and Spain on Friday.

The US schedule is busier, with regional Fed surveys (Richmond today, Kansas Thursday) providing insights, particularly on price indices and employment trends. Markets will also focus on Michigan inflation expectations (Friday), especially after last month’s rebound. Housing data is another highlight: new home sales (Monday), home prices (Tuesday), and pending sales (Thursday). However, the spotlight will be on Thursday’s second estimate of Q2 GDP and Friday's July PCE report. Headline PCE is expected to remain steady at 2.6% year-over-year (+0.2% month-over-month), while core PCE is projected to rise by 0.3% month-over-month, pushing the annual rate to 2.9%, the highest since February and a notable jump from 2.8%.This data could intensify the debate between those viewing inflation as transitory and those expecting more persistent pressures. Labor market dynamics will play a critical role; aggressive easing would be difficult to justify if job growth recovers after the year-to-date hiring slowdown. Consumer spending, particularly on services, will also be closely watched.

Overnight Headlines

  • US Pres Trump Removes Fed's Cook From Position,

  • Trump Vows Export Curbs, Tariffs In Digital Tax Reprisal

  • Trump Hails South Korea Ties As Lee Looks To Ease Trade Tensions

  • Fed’s Williams Says Low Neutral-Rate Era ‘Appears Far From Over’

  • Fed’s Logan Says Money Markets Could See Pressure At Quarter

  • US New-Home Sales Exceed Forecast Following Upward Revision

  • French PM To Face Potential Ousting In High-Stakes Confidence Vote

  • UK Unemployment Set To Hit 5%, Think-Tank Predicts

  • UK Shop Prices Rise By Most Since March 2024

  • RBA Minutes Show Pace Of Future Easing Will Depend On Data

  • Japan To Request Record-High 32T Yen For Govt Bond Expenses

  • South Korea Companies To Invest $150 Billion In US

  • Musk Accuses Apple, OpenAI Of Stifling AI Competition In Antitrust Lawsuit

  • Korean Air Announces 103 Boeing Jet Order Amid Trump-Lee Summit

  • Trump Says Putin’s Dislike Of Zelenskiy Holding Up Meeting

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)


  • EUR/USD: 1.0700 (EU1.16 billion), 1.1680 (EU765.8 million), 1.1790 (EU644.6 million)  

  • USD/JPY: 148.00 ($992.3 million), 146.35 ($716 million), 135.00 ($540 million)  

  • AUD/USD: 0.6400 (AUD622 million), 0.6455 (AUD350 million), 0.6475 (AUD346.4 million)  

  • USD/BRL: 5.5100 ($396.8 million), 6.1500 ($352.6 million)  

  • USD/CAD: 1.3710 ($680.3 million), 1.3945 ($428.1 million), 1.3720 ($400 million)  

  • GBP/USD: 1.3500 (GBP514.8 million), 1.3450 (GBP380 million)

CFTC Positions as of the Week Ending August 22 

  • Speculators reduce their net short position in CBOT US 5-year Treasury futures by 57,986 contracts, bringing it down to 2,508,383. They also increase their net short position in CBOT US 10-year Treasury futures by 3,293 contracts, raising it to 945,516. The net short position for CBOT US 2-year Treasury futures is trimmed by 55,058 contracts, now at 1,324,539. Conversely, speculators elevate their net short position in CBOT US UltraBond Treasury futures by 33,030 contracts to 242,162. The net short position in CBOT US Treasury bonds futures decreases by 9,751 contracts, standing at 51,043. 

  • Bitcoin's net short position is at -1,200 contracts, while the Swiss franc shows a net short position of -27,278 contracts. The British pound's net short position is -25,185 contracts, and the Euro has a net long position of 118,745 contracts. The Japanese yen has a net long position of 77,581 contracts. 

  • Equity fund speculators have reduced their S&P 500 CME net short position by 30,327 contracts, bringing it to 365,804, while equity fund managers have cut their S&P 500 CME net long position by 23,237 contracts, now totaling 864,075.


Technical & Trade Views

SP500

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 6440 Target 6500

  • Below 6420 Target 6370

EURUSD 

  • Daily VWAP Bearish 

  • Weekly VWAP Bullish

  • Below 1.1750 Target 1.15

  • Above 1.18 Target 1.1910

GBPUSD 

  • Daily VWAP Bearish 

  • Weekly VWAP Bullish

  • Below 1.36 Target 1.30

  • Above 1.3650 Target 1.3850

USDJPY 

  • Daily VWAP Bullish 

  • Weekly VWAP Bearish

  • Below 1.49 Target 1.45

  • Above 1.51 Target 1.54

XAUUSD

  • Daily VWAP Bullish 

  • Weekly VWAP Bullish

  • Above 3380 Target 3415

  • Below 3300 Target 3260

BTCUSD 

  • Daily VWAP Bearish 

  • Weekly VWAP Bearish

  • Above 110k Target 118k

  • Below 109k Target 105k