Daily Market Outlook, August 5, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

Asian stocks increased as dip buying became the dominant theme alongside rising expectations of possible interest rate reductions. The MSCI Asia Pacific Index rose by 0.6%, with South Korean shares climbing 1.4%. Oil prices stabilised after a three-day decline, as investors assessed risks to Russian oil supplies, particularly with US President Donald Trump intensifying his threats against India's oil purchases from Moscow. Indian stocks dipped 0.5% and the rupee fell. Futures for the S&P 500 went up by 0.2% following the index's most significant rally since May. Market participants are increasingly anticipating interest rate reductions by the Federal Reserve after last Friday's disappointing jobs report, which negatively impacted stocks and caused a significant rise in bond prices. Equities have sharply recovered from their April lows, buoyed by optimism that American businesses can withstand the effects of tariffs and that the US economy may evade a recession. In Japan, a recent auction of 10-year government bonds saw weaker demand, influenced by poor US employment data from the previous week that heightened speculation of an imminent Fed rate cut, leading to lower yields. Tuesday's 10-year yields were down 4 basis points, trading at 1.465%. On the tariffs front, the European Union anticipates that Trump will announce executive orders this week to formalise reduced tariffs for cars and provide exemptions for certain industrial products like aviation parts, as per sources familiar with the situation. In the meantime, Switzerland has expressed its resolve to win over Washington following last week’s surprising announcement of 39% tariffs on exports to the US.

Trump’s latest controversial move was the dismissal of the Bureau of Labour Statistics (BLS) chief, coming on the heels of last week’s notable revisions to recent employment reports. This topic is likely to remain in the spotlight, as the BLS is set to release its preliminary annual benchmark revisions on September 9, shortly after the next employment report on September 5. Monthly employment data rely on assumptions to adjust survey estimates of employment levels, accounting for the net births and deaths of firms—data that cannot be captured in real time. The annual benchmark revision, however, uses larger but less frequent surveys to refine these estimates, providing more granular insights into firm dynamics. Currently, the headline establishment survey assumes that firm births outpacing deaths has boosted total employment by approximately 1.1 million. Yet, the Business Employment Dynamics (BED) survey at the end of 2024 suggested a much smaller net effect, closer to 120,000 (dark green line). While these figures aren’t directly comparable, the softer BED data point to a likely downward adjustment in the preliminary benchmark employment level set to be announced on September 9. If Trump was displeased with last week’s downward revisions, his dissatisfaction with the upcoming preliminary benchmark revisions could be even greater. For example, last year’s initial estimate reduced total employment by 818,000 (later revised to a drop of 598,000). However, one potential silver lining for him is that another significant downward revision could strengthen the case for a September rate cut, similar to what occurred last year.

The packed data calendar last week may have overlooked the Sentix investor confidence indices. However, with a quieter start to this week, the euro area investor confidence index caught attention by registering a surprising decline. The overall index fell back below zero, with both the current situation and expectations indices dropping in August compared to July. The Sentix survey's timeliness is a key feature, as it aims to gain a competitive advantage by conducting its survey within the first two days of the month. This timing means the latest results reflect initial reactions to recent news about trade agreements between the US and the euro area. One interpretation of the decline in these indicators is that ECB President Lagarde and Governing Council members may have slightly overstated the positive impact of reduced uncertainty following the trade deal. While greater clarity is generally preferable, it seems investors are perceiving the outlook as darker rather than brighter. This sentiment is evident in the latest survey results.

Overnight Headlines

  • US, China To Resume Trade Talks Tues, Eyeing Tariffs, Trump-Xi Summit

  • Fed’s Daly: Time Is Nearing For Cuts, May Need More Than Two

  • Palantir Tops $1B In Revenue For The First Time, Boosts Guidance

  • Japan Panel Urges Record Minimum Pay Hike In Bright Sign For BoJ

  • Trump To Raise Tariffs On India Over Russian Oil Purchases

  • Korean Inflation Cools, Boosting Case For BoK To Cut Rate Again

  • Credit Agricole Raises Banco BPM Stake To 20.1% With Derivatives

  • TSMC Fires Workers For Breaching Rules On Chip Tech Info

  • DRAM Prices Soar As China Eyes Self-Reliance For High-End Chips

  • Visa In Talks To Move European Headquarters To Canary Wharf

  • Trump’s ‘Big, Beautiful Bill’ Triggers Boom For Defence Tech Start-Ups

  • Gold Rises For Fourth Session As US Jobs Data Lifts Fed Rate Cut Bets

  • Core Scientific Shareholders Balk At Terms Of CoreWeave Merger Offer

  • Australia Picks Mitsubishi Over German Rival For $6.5B Defence Deal

  • Blockchain Lender Figure Technology Files Confidentially For IPO

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD:1.1500 (1.6BLN), 1.1525 (1.1BLN), 1.1550 (3BLN), 1.1585 (1.5BLN) 1.1600 (2.6BLN)

  • USD/CHF: 0.8100 (380M). EUR/CHF: 0.9300 (270M)

  • EUR/GBP: 0.8660-70 (1.2BLN), 0.8700-05 (715M), 0.8725 (324M)

  • GBP/USD: 1.3330 (372M), 1.3350-60 (761M), 1.3390 (1.1BLN)

  • AUD/USD: 0.6465-80 (1.7BLN), 0.6500 (706M), 0.6550 (1.2BLN)

  • USD/CAD: 1.3750 (247M), 1.3770 (270M), 1.3800 (236M), 1.3850 (621M)

  • USD/JPY: 146.00 (611M), 146.25-30 (470M), 146.50 (321M), 147.50-55 (385M)

  • 148.00 (568M). AUD/JPY: 95.00 (200M)

CFTC Positions as of the Week Ending August 1 

  • The net short position for Bitcoin is -1,008 contracts. The Swiss franc has a net short position of -24,034 contracts. The British pound's net short position stands at -12,028 contracts. In contrast, the euro holds a net long position of 123,359 contracts, while the Japanese yen has a net long position of 89,243 contracts. 

  • Equity fund speculators increased their S&P 500 CME net short position by 32,269 contracts, bringing the total to 363,032. Meanwhile, equity fund managers raised their S&P 500 CME net long position by 18,743 contracts to a total of 869,641. Speculators raised the net short position for CBOT US 5-year Treasury futures by 41,959 contracts, resulting in 2,511,883 contracts. Additionally, they increased the net short position for CBOT US 10-year Treasury futures by 147,096 contracts, totaling 896,630. On the other hand, speculators reduced their net short position for CBOT US 2-year Treasury futures by 45,415 contracts to 1,203,237 contracts and trimmed the net short position for CBOT US UltraBond Treasury futures by 15,530 contracts, resulting in 216,813 contracts..

Technical & Trade Views

SP500

  • Daily VWAP Bullish Above 6330 Target 6400

  • Weekly VWAP Bearish Above 6300 Target 6150

EURUSD 

  • Daily VWAP Bullish Above 1.15 Target 1.1640

  • 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 Bullish Above 3320 Target 3500

  • Weekly VWAP Bullish Above 3350 Target 3600

BTCUSD 

  • Daily VWAP Bullish Above 114k Target 118k

  • Weekly VWAP Bearish Below 118k Target 110k