Daily Market Outlook, July 15, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
In a relatively active overnight news session, China reported slightly better-than-expected Q2 GDP growth of 5.2% y/y. However, June retail sales growth of 4.8% y/y fell short of consensus by 0.5 percentage points, indicating that private consumption remains subdued. Equity markets found some support from the announcement that Nvidia has received US government approval to resume AI chip sales to China. Nevertheless, attention is shifting to today's US CPI release and a packed corporate earnings calendar, which are expected to dominate market sentiment.
In Japan, ahead of this weekend's upper house elections, the 10-year JGB yield traded within a narrow range but still reached a new post-GFC peak at 1.598%. Meanwhile, in the UK, the BRC retail sales monitor showed like-for-like growth of 2.7% y/y in June. However, this figure reflects a low base from last year and measures value rather than volume, suggesting much of the growth is driven by inflation. For example, food store sales grew 3.7% y/y in June, likely flat in real terms, as the BRC shop price index showed food prices rising 3.7% y/y, while official CPI data recorded food price inflation above 4% y/y in May. The Financial Times reports that Rachel Reeves will use her Mansion House speech this evening to advocate for significantly increasing risk-taking in the financial services sector.
Yesterday’s disappointing REC/KPMG jobs report, coupled with some dovish commentary from Bailey in The Times, contributed to a drop in rate expectations. However, for those speculating that a more activist Bank of England might lower the Bank Rate to provide fiscal relief for Reeves, it’s worth examining how the OBR’s debt-interest calculations have evolved in recent years. Back in 2021, a one-percentage-point reduction in the Bank Rate was estimated to save the government £11.9 billion on its interest bill by the fifth year of the OBR forecast horizon. Now, that figure has fallen to less than £5 billion. The reason? Quantitative Tightening (QT). The Bank of England charges the government the Bank Rate on reserves created to fund QE gilt purchases, but as QT progresses, the scale of QE gilt holdings is shrinking. Assuming QT continues for another five years, the impact of lower funding costs will diminish significantly. At the same time, the sensitivity to gilt yields has increased. This is because there is now more debt overall, and a smaller proportion of it is held by the Bank of England, where coupon payments are effectively recycled within the public sector. Consequently, rate cuts are no longer the fiscal panacea they once were, as short-term rates play a much smaller role in determining debt interest costs.
Bitcoin experienced a decline as traders took profits following a record-setting surge that pushed the leading digital currency above 120k. The cryptocurrency dropped by as much as 3.2%, marking its largest decline in over three weeks. Ether, the second-largest cryptocurrency, fell by 1.4%, while other smaller coins like XRP and Solana saw nearly 2% decreases each. This pullback occurred after Bitcoin surpassed 123k for the first time on Monday, driven by optimism surrounding possible advancements in US digital asset regulations that could support President Donald Trump’s crypto-friendly policies. Additionally, the cryptocurrency has gained from a recent upswing in other risk assets, including near-record US stock prices, as worries about the economic repercussions of Trump’s new trade war subsided.
Overnight Headlines
Nvidia Wins Approval To Resume AI Chip Sales To China
EU Threatens Counter-Tariffs, Trump Says Open To Talks
UK To Subsidise EV Sales As Adoption Lags
Trump Threatens 17% Tariff On Most Mexican Tomato Imports
Trump To Unveil $70B In AI And Energy Investments
China GDP Grows 5.2% In Q2, Retail Sales Miss Expectations
China Home Prices Decline Further As Property Slump Deepens
Dollar-Yen Holds Near Multi-Week Top Around 148.00
Australia’s PM To Meet Xi Amid Trade-Security Tensions
Pentagon Will Begin Using Musk’s Grok AI System
Supreme Court Backs Trump Plan To Dismantle Education Dept
Port Of LA Sees Record Container Traffic Ahead Of Tariff Deadline
Bitcoin Hits Fresh Record High, Ethereum And XRP Follow
Meta Faces $8B Privacy Trial As CEO And Investors Face Off
TSX Hits Record On Thomson Reuters And Tech Stock Gains
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1600 (1.7BLN), 1.1615 (417M), 1.1625-35 (560M), 1.1640 (450M)
1.1665-70 (1.1BLN), 1.1700 (512M), 1.1730 (874M), 1.1745-50 (1.1BLN)
USD/CHF: 0.7900 (550M), 0.8000 (500M)
GBP/USD: 1.3450-60 (310M)
AUD/USD: 0.6490-0.6500 (1.7BLN), 0.6560 (696M), 0.6600-05 (530M)
USD/JPY: 146.75-80 (740M), 147.75 (275M), 148.00 (850M), 148.25-30 (1BLN)
EUR/JPY: 172.10 (430M)
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
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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!