Daily Market Outlook, August 6, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Asian stock markets saw gains, driven by a rise in Japanese carmakers fuelled by hopes of achieving lower auto tariffs in talks with the US. The MSCI Asia Pacific Index advanced, with Japan's Topix Index up by 1%. Toyota, set to announce earnings on Thursday, surged by 2.2%. Oil prices climbed for the first time in five days, while the dollar weakened. Treasuries saw a slight dip, with the yield on the 10-year note up 1 basis point to 4.22%. Futures for US and European equities rose by 0.3%. Indian stock prices remained stable after the central bank opted to keep the benchmark interest rate unchanged, as officials evaluate the repercussions of US President Donald Trump’s tariff strategies on the nation. Asian chip-related shares, along with some pharmaceutical stocks, fell following Trump's announcement of impending levies on those sectors “within the next week or so.” Japan’s chief trade negotiator, Ryosei Akazawa, is travelling to Washington to persuade the US to honour its commitment to reduce car tariffs, as agreed in last month’s trade negotiations. Tariff discussions once again took centre stage, with Trump indicating he is “very close to a deal” with China, while India braces for the impact of his threats. US stocks are stabilising following a recent surge amid worries regarding future interest rate movements and poor economic reports. Recent soft job figures have complicated the Federal Reserve’s efforts to balance controlling inflation with fostering economic growth. The US services sector stagnated in July, with companies, facing weak demand and rising expenses, cutting down on staff. Data released on Tuesday revealed a sluggish service sector confronting consequences from increased tariffs, hesitant consumers, and uncertainties related to Trump's policies. Asian chip-related shares fell following a series of negative developments, such as a Taiwanese investigation into suspected theft of trade secrets from Taiwan Semiconductor Manufacturing Co. The chipmaker's shares dropped 1.7% on Wednesday. Additionally, Advanced Micro Devices Inc. cautioned about its uncertain access to the crucial Chinese market. Super Micro Computer Inc. saw a steep decline after its earnings fell short of expectations. Meanwhile, Trump hinted at the possibility of imposing higher tariffs on other nations purchasing energy from Russia, including China, after stating earlier on Tuesday that he would increase tariffs on Indian exports within 24 hours. India is striving to mitigate the economic consequences from the announced tariffs, leaving officials in New Delhi uncertain about their strategy. In related tariff developments, Swiss President Karin Keller-Sutter has arrived in Washington to make a last-minute push for a reduction in the 39% tariff implemented last week by Trump.
The US services sector shows minimal growth, with the ISM index barely in expansion at 50.1 for July, down from 50.8. Key details reveal stagflation signals: prices continue to surge while employment declines further into contraction. The wide gap between these indices mirrors past periods of economic distress, highlighted by the 'misery index' (inflation + unemployment). While Fed policymakers likely acknowledge these challenges, disagreements persist on balancing inflation and unemployment in future rate decisions. Despite labor market improvements supporting Trump's push for cuts, the Fed may resist aligning with his pace.
Overnight Headlines
EUR/USD: 1.1500-10 (2.5BLN), 1.1550 (1.6BLN), 1.1575-80 (697M)
1.1600 (2.5BLN), 1.1650 (1.5BLN)...
USD/CHF: 0.8150 (200M). EUR/CHF: 0.9310 (620M)
GBP/USD: 1.3225 (296M), 1.3250 (815M), 1.3300 (422M)
AUD/USD: 0.6450-60 (753M), 0.6500 (474M)
USD/CAD: 1.3720 (313M), 1.3800-10 (392M)
USD/JPY: 146.25 (515M), 146.50 (877M), 147.00 (1.6BLN), 148.45-50 (421M)
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
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Past performance is not indicative of future results.
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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!