Daily Market Outlook, July 21, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

The Japanese ruling coalition fell three seats short of maintaining a majority in the upper house elections. Prime Minister Ishiba plans to stay in office despite losing majority control in both houses. Japanese markets and US Treasuries were closed overnight due to a Japanese holiday, so the full market response has yet to unfold; however, the Yen has strengthened slightly compared to Friday’s close. Ishiba’s weakened political position could impact ongoing trade negotiations with the US as the August 1 deadline approaches. Meanwhile, China kept its benchmark lending rates steady, with the one-year prime rate at 3% and the five-year prime rate at 3.5%. In New Zealand, Q2 inflation rose by 0.5% quarter-on-quarter, falling 0.1 percentage points short of expectations and potentially paving the way for rate cuts to resume after the Reserve Bank of New Zealand’s recent pause. In the UK, Rightmove reported a 1.2% month-on-month drop in residential property asking prices, reflecting a larger-than-average seasonal decline. Additionally, the Financial Times noted that UK workplace pensions are set to return to the spotlight as the government seeks to revive the Pensions Commission.

This week’s calendar hints at a summer-like lull, with fewer scheduled events dominating the news cycle. However, it’s not entirely uneventful. From a UK perspective, the release of June public finance data on Tuesday will draw significant attention due to the fiscal constraints in focus. Early indications show the government’s cash requirement for 2025-26 already exceeds planned levels. 

On Thursday, the ECB Governing Council meeting is unlikely to deliver a rate cut, with market expectations firmly pointing to September as the next potential move. The press conference will likely centre on the differing views about a potential cut in September, though Lagarde is expected to avoid any pre-commitments at this stage. With the ECB meeting expected to be relatively uneventful, the flash July PMIs, also slated for Thursday, emerge as the key highlight. For the US and UK, June PMI indices were comfortably above 50, signalling expansion, and it would take a significant surprise to shift into contraction territory at the beginning of H2. In contrast, the euro area remains on the edge, with June’s final Composite PMI at 50.6.

In the US, home sales data (Wednesday/Thursday), regional Fed surveys (Tuesday/Thursday), and durable goods orders (Friday) fill the data calendar during the Fed’s blackout period. Meanwhile, unexpected trade developments or potential Trump vs. Powell headlines could still dominate the narrative.

Overnight Headlines

  • Japan Ruling Party’s Election Loss Is In The Price, Investors Say

  • New Zealand Inflation Accelerates Less Than Forecast To 2.7%

  • China Holds Lending Rates; Softening Consumer Sentiment Persists

  • Trump, Xi Tipped To Meet Ahead Or During APEC Summit In S. Korea

  • Firing Powell Would Shatter The Economy’s Inflation Defences

  • Trump Threats Send Wall Street Hunting For Perfect Powell Hedge

  • BoE Scrutinizes Lenders For Dollar Risk Amid Woes, Sources Say

  • EU To Prepare Retaliation Plan As US Trade Stance Hardens

  • Global Hack On Microsoft Product Hits US, State Agencies

  • UK Consumer Sentiment Suffers First Big Fall In Nearly 3 Years

  • TSMC Joins $1T Club Driven By Robust AI Demand; Raised Outlook

  • Oil Edges Higher, Aided By EU’s Pact To Impose Sanctions On Russia

  • Netflix Is Running Out Of Worlds To Conquer

  • Daimler Truck Mulls China Production Exit As It Faces ‘Crazy’ Down Cycle

  • UK Property Asking Prices Fall Faster Than Usual In July

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.1585 (640M), 1.1600 (3.7BLN), 1.1625-30 (690M), 1.1640 (1.8BLN)

  • 1.1690-95 (1.5BLN), 1.1750 (2BLN)

  • USD/CHF: 0.7975 (300M), 0.8070 (707M)

  • EUR/CHF: 0.9325 (220M), 0.9375 (218M)

  • EUR/GBP: 0.8685-0.8700 (345M)

  • GBP/USD: 1.3350 (375M), 1.3430 (271M), 1.3475-80 (886M)

  • AUD/USD: 0.6475-80 (424M), 0.6500 (870M), 0.6600 (1BLN)

  • NZD/USD: 0.5905 (380M)

  • USD/JPY: 147.00 (455M), 147.30 (240M), 147.50 (250M), 148.00-10 (1.3BLN

  • 149.00 (387M). AUD/JPY: 96.50 (893M)

  • CHF/JPY: 183.00 (225M), 185.50 (225M), 187.00 (450M), 189.50 (450M)

CFTC Positions as of the Week Ending July 15th 

  • Speculators have reduced their net short position in CBOT US 5-year Treasury futures by 11,259 contracts, bringing it down to 2,505,528. They've also decreased their net short position in CBOT US 10-year Treasury futures by 68,202 contracts, resulting in a total of 772,377. Conversely, there has been an increase in the net short position for CBOT US 2-year Treasury futures by 33,727 contracts to 1,299,860. Speculators have raised their net short position in CBOT US UltraBond Treasury futures by 5,794 contracts to 228,618 and in CBOT US Treasury bonds futures by 21,386 contracts to 130,144. 

  • Equity fund speculators have cut their net short position in the S&P 500 CME by 8,741 contracts to 329,471, while equity fund managers have decreased their net long position in the S&P 500 CME by 2,265 contracts to 862,416. 

  • The FX net long positions stand at 103,582 contracts for the Japanese yen, 128,221 contracts for the euro, and 29,191 contracts for the British pound. The Swiss franc has a net short position of -22,637 contracts, and Bitcoin's net short position is -2,486 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 Bearish Above 113k Target 120k

  • Weekly VWAP Bullish Above 108k Target 130k