Daily Market Outlook, August 8, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Asian markets advanced, driven by a rise in Japanese stocks, as indications of reduced trade tensions with the US and positive tech earnings improved market sentiment. The MSCI Asia Pacific Index increased, marking its fifth consecutive day of gains. The Nikkei-225 index climbed 2.2%, following comments from Japan’s trade negotiator that the US had agreed to eliminate the stacking of universal tariffs and reduce car duties. Shares of SoftBank and Sony rose after reporting earnings. Futures for US and European equities also gained 0.2%. US Treasury yields slightly increased, with the 10-year yield declining by one basis point to 4.24%. Gold futures in New York spiked after a Financial Times article suggested that bullion bars could be subject to US tariffs. The most active contract soared to an all-time intraday high, surpassing $3,534 per ounce in New York, increasing its premium over London’s spot price. Meanwhile, oil is poised to record its largest weekly decline since June. Asian stocks are set for their strongest week since June, fuelled by mounting speculation regarding a potential interest rate cut by the Federal Reserve, despite ongoing tariff-related volatility. President Donald Trump intensified tensions with his recent trade moves, targeting India and imposing a 39% tax on Swiss exports to the US, while stating he is “very close to a deal” with China. The US government confirmed it would abolish the stacking rule on tariffs for Japan and reduce automotive levies, as stated by Tokyo’s chief trade negotiator Akazawa after a Thursday meeting with his US counterparts. US officials expressed disappointment that the stacking rule had been enforced against Japan despite a verbal agreement and pledged to reimburse any excess levies paid. Akazawa noted that no timeline was established for when these changes would take effect. Shares of Toyota, Honda, and other automotive manufacturers rose following these comments, and technology firms also contributed to the surge in Japanese stocks, with SoftBank reaching a record high after reporting a quarterly profit and Sony shares increasing further after it raised its operating income forecast.
The August BoE meeting leaned hawkish as anticipated. The Bank Rate was trimmed by 25bps to 4.0%, with key takeaways: (1) A narrow 5-4 vote split. (2) One-year CPI inflation forecast increased to 2.7% from 2.4%. (3) Explicit mention that monetary policy restrictiveness has eased with rate cuts. (4) Medium-term inflation risks have slightly risen since May. (5) Concerns over persistently high inflation expectations tied to food prices. (6) Reduced spare capacity in the medium-term outlook. Future decisions hinge on data, particularly CPI, though tighter fiscal policy post-budget may temper hawkish rate expectations. The QT decision for next month remains uncertain and a central focus. The MPC remains cautious about inflation expectations, making further rate cuts unlikely. The outlook hinges on upcoming CPI data and fiscal policy. NIESR forecasts suggest a £50bn fiscal tightening at the Autumn Budget, aligning with the OBR’s analysis that slower productivity growth could lead to a similar shortfall. Such fiscal tightening might prompt a looser monetary stance. While tax hikes are one option, potential refinements to fiscal rules—like excluding defence spending increases—could also play a role. The balance between tax increases and fiscal adjustments will be key for BoE rate expectations into 2026.
After a quiet period, UK data releases pick up next week with key reports on the labour market (Tuesday) and the preliminary Q2 GDP figures (Thursday). A potential sixth consecutive drop in payroll employment for July could strengthen the case for an August rate cut. Despite contractions in April and May monthly GDP figures, base effects suggest Q2 growth may still register as slightly positive, though far from impressive. In the US, the spotlight will be on July CPI data (Tuesday), though developments surrounding Trump’s Fed Governor nomination could steal attention. The core inflation rate may edge back up to 3.0% year over year, highlighting the divergence between inflation and economic activity after the recent weak labour market report. Additional updates will include July retail sales (Friday) and the latest University of Michigan confidence survey (Friday). Globally, Q2 GDP updates will make headlines in several regions. The euro area will deliver another look at its figures (Thursday) following the initial 0.1% quarter-on-quarter estimate, while Japan and Switzerland will release their first estimates (Friday). Meanwhile, in Australia, the Reserve Bank of Australia is expected to announce a 25bp rate cut during its meeting on Tuesday, marking a key moment following the recent wave of central bank decisions.
Overnight Headlines
Trump Names Miran To Fill Seat On Federal Reserve Board
BoJ Summary Shows Policymakers Discussed Resuming Hike
Japan Says US Agreed To End Tariff Stacking, Cut Car Levy
Treasury Yields Rise Amid Soft Demand, Large Trade Speculation
PBoC Eyes Liquidity Boost, Possible RRR Cut Ahead
Oil Futures Extend Losing Streak To Six Sessions
OpenAI Launches Powerful GPT-5 Model For Coding, Writing
Expedia Raises Sales Outlook Following Strong Bookings
Gilead Raises Guidance On HIV Treatment Demand
Flutter Tops Q2 Earnings Expectations, Raises FY Guidance
Block Raises 2025 Outlook As Gross Profit Improves
Tesla To Disband Dojo Supercomputer Team As Leader Departs
Trump Signs Debanking, Crypto 401(k) Executive Orders
Netanyahu Says Israel Plans To Take Full Control Of Gaza
Meta Picks Pimco, Blue Owl For $29B Data Center Financing
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1550 (1.2BLN), 1.1600 (1.5BLN), 1.1650-60 (1.6BLN)
1.1670-75 (343M), 1.1685 (400M), 1.1700 (2.1BLN)
EUR/GBP: 0.8675 (1.8BLN), 0.8700 (1.4BLN)
GBP/USD: 1.3400 (210M), 1.3450 (265M), 1.3500 (257M)
AUD/USD: 0.6500 (4.7BLN), 0.6560-65 (397M)
USD/CAD: 1.3700 (502M), 1.3750 (867M), 1.3775 (695M), 1.3800 (471M)
USD/JPY: 146.50 (282M), 147.00 (315M), 147.40-45 (414M), 147.70-75 (600M)
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 6340 Target 6430
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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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!