Daily Market Outlook, July 14, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

It seems increasingly evident that President Trump uses tariffs primarily as a way to command the news cycle and maintain visibility. He prefers not to engage in lengthy and complicated trade negotiations that aim for mutual benefits. Why go through that process when he can threaten a 30% tariff on a Saturday morning and dominate the news for the whole weekend? 

Recognising this as largely a negotiating strategy, markets in Asia have only reacted moderately. It's unclear how Brussels can meet Trump's requests, partly because his actual desires remain ambiguous. The EU's tariffs on U.S. products are already minimal, leaving little room for reductions, and conceding to domestic tax and regulation exemptions poses significant political challenges. There’s a chance the market’s calm response might ultimately misfire. Investors believe Trump is eager to avoid another market plunge and may relax tariffs when necessary. However, with U.S. stocks reaching record levels and bond yields easing, Trump might justifiably think the markets are aligned with him and appreciate how "wonderful" tariffs can be. Regardless, it appears likely that the U.S. effective tariff rate will resemble the Smoot-Hawley tariffs, which significantly contributed to the Great Depression, and we will see if Trump is correct and the vast majority of economists are mistaken. The U.S. trade deficit has yet to be resolved in a straightforward manner. Recently, China reported a 48% increase in its trade surplus with the U.S. in June, reaching nearly $27 billion, while its total exports surpassed expectations. Trump also reignited his conflict with Federal Reserve Chair Jerome Powell, suggesting it would be "a great thing" if Powell resigned, even though Trump appointed him to that position eight years ago. White House economic adviser Kevin Hassett warned that Trump could have valid reasons to dismiss Powell due to budget overruns on renovations at the Fed's headquarters in Washington, D.C.  Analysts predict that a Trump appointee for Fed chair would likely carry out his wishes by aggressively lowering interest rates, although it remains uncertain if other members of the Federal Open Market Committee would support this. This could lead to lower short-term market rates, but longer-term yields would probably rise as investors seek compensation for the increased risk of rapid inflation, similar to what occurred in Turkey.

Bitcoin has surged past $120,000 for the first time, driven by growing investor confidence that has steadily risen since the cryptocurrency broke out of a narrow trading range. This range had previously fuelled scepticism about Bitcoin's ability to regain the record-breaking momentum it enjoyed earlier in the year. The latest rally comes in the wake of Donald Trump's re-election to a second term as U.S. president. For months, Bitcoin hovered around the $100,000 level. Its performance was dampened by uncertainties surrounding Trump's political and economic policies, despite his administration's pro-crypto stance. Now, as other risk assets like stocks achieve new record highs, Bitcoin has reignited its upward trajectory, capturing renewed market enthusiasm.

The upcoming week has a packed macroeconomic calendar. On Tuesday, we’ll see the first glimpse of Q2 China GDP. Earlier in the quarter, trade gains and increased government spending likely provided support, but the outlook remains fragile due to weak domestic demand, high debt levels, and deflationary pressures. The spotlight will be on US CPI data (Tuesday), where a further increase in price growth is anticipated. Forecasts suggest a 0.3% month-on-month rise in the headline figure, which could push the year-on-year rate to 2.6% from 2.4%. Core CPI is expected to increase by 0.3% month-on-month, raising the year-on-year rate to 2.9% from 2.8%. Markets may react sharply to any significant deterioration, especially given concerns over tariff impacts and fiscal uncertainty following Trump’s legislative changes. Other key US data includes PPI, industrial production, and the Beige Book (Wednesday), as well as retail sales (Thursday). Additionally, early US July surveys will start to emerge, with the Michigan sentiment survey (Friday) standing out. Note that the Federal Reserve’s blackout period begins Friday. The UK also faces a pivotal week. On Tuesday, the Chancellor will deliver her policy update at Mansion House, followed by Governor Bailey’s monetary perspective. Wednesday brings CPI data, while Thursday’s labour market reports will be crucial for the Bank of England. A further decline in labour market activity would carry more weight than inflation volatility, given the recent weakening of employment indicators. In the Eurozone, the calendar is relatively light, with the ZEW survey (Tuesday) being the main highlight.

Overnight Headlines

  • Trump Threatens 30% Tariffs On EU, Mexico

  • Bond Traders Cast Doubt On September Fed Cut Ahead Of CPI

  • Trump Says 200% Pharma Tariffs Coming; Wall Street Shrugs

  • Trump ‘Can Fire Fed Chair If Cause Exists’, Says Hassett

  • EU To Extend Suspension Of Countermeasures To Allow US Talks

  • Germany’s Merz: 30% US Tariffs Would Hit Industry ‘To Core’

  • France’s Macron Boosts Defence Budget, Warns Europe Under Threat

  • Fed Probes Powell’s Tenure Costs, Authority To Remove Him

  • Pentagon Official: Ukraine Weapons Pause As China Focus Grows

  • Nvidia’s Huang: China’s Military Unlikely To Use US AI Chips

  • Bitcoin Hits Record High Of $120K As Bullish Momentum Builds

  • SpaceX To Invest $2B Into Elon Musk’s xAI

  • Oil Edges Higher On Supply Concerns Amid Tariff Noise

  • BoJ Is Said Likely To Consider Raising Inflation Forecast

  • China’s Export Growth Picks Up As Fragile Trade Truce Holds

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.1600-10 (3.6BL),1.1615-25 (2BL), 1.1640-50 (2.1BL), 1.1680 (355M)

  • 1.1700 (1BLN), 1.1725 (1.1BLN), 1.1730-40 (2.8BLN), 1.1750 (1.8BLN)

  • USD/CHF: 0.7925 (251M). EUR/CHF: 0.9400 (248M)

  • EUR/GBP: 0.8600 (711M), 0.8650 (581M), 0.8675 (480M), 0.8695-0.8700 (1.2BLN)

  • GBP/USD: 1.3590-1.3605 (583M)

  • AUD/USD: 0.6545-50 (356M), 0.6600 (386M)

  • USD/CAD: 1.3675 (500M)

  • USD/JPY: 146.00-10 (1.1BLN), 147.00 (310M), 147.20 (281M), 147.50 (250M)

CFTC Positions as of the Week Ending July 11th 

  • Speculators have raised their net short position in CBOT US 5-year Treasury futures by 39,785 contracts, bringing the total to 2,516,787. They have also increased the net short position in CBOT US 10-year Treasury futures by 56,917 contracts, now totaling 840,579. Conversely, speculators have reduced their net short position in CBOT US 2-year Treasury futures by 14,515 contracts, resulting in a total of 1,266,133. The net short position for CBOT US UltraBond Treasury futures has been trimmed by 4,138 contracts, now at 222,824. Additionally, there is an increase in the net short position for CBOT US Treasury bonds futures by 4,301 contracts, reaching 108,758. 

  • In the equity sector, fund speculators have raised their net short position in S&P 500 CME by 39,349 contracts to a total of 338,212, while equity fund managers have increased their net long position in the same index by 20,105 contracts, now totaling 864,681. 

  • The FX net long positions are as follows: Japanese yen at 116,155 contracts, Euro at 120,596 contracts, British pound at 33,194 contracts. On the other hand, the Swiss franc has a net short position of -22,196 contracts, and Bitcoin shows a net short position of -2,436 contracts.

Technical & Trade Views

SP500

  • Daily VWAP Bearish Above 6260 Target 6400

  • Weekly VWAP Bullish Above 6100 Target 6515

EURUSD 

  • Daily VWAP Bearish Below 1.1710 Target 1.16

  • Weekly VWAP Bullish Above 1.1640 Target 1.19

GBPUSD 

  • Daily VWAP Bearish Below 1.3580 Target 1.3450

  • Weekly VWAP Bearish Below 1.3580 Target 1.3450

USDJPY 

  • Daily VWAP Bullish Above 1.45 Target 1.48

  • Weekly VWAP Bullish Above 1.45 Target 1.51

XAUUSD

  • Daily VWAP Bullish Above 3320 Target 3420

  • Weekly VWAP Bearish Below 3350 Target 3290

BTCUSD 

  • Daily VWAP Bullish Above 113k Target 120k

  • Weekly VWAP Bullish Above 108k Target 130k