Daily Market Outlook, July 22, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Asian stock markets remained steady near a four-year high on Tuesday, supported by Wall Street’s record closing, as investors prepared for a variety of corporate earnings and assessed the ongoing tariff discussions between the U.S. and its trade partners. Japanese markets resumed trading after a holiday following last weekend's elections, where the ruling coalition faced a setback in the upper house. Despite this, Prime Minister Shigeru Ishiba pledged to stay in office. Japanese stocks initially surged at the open, then traded slightly higher, while bonds reacted quietly since the election outcomes had already been anticipated and were not as unfavourable as some had worried.
U.S. Treasury yields edged higher in anticipation of speeches from Federal Reserve officials, including Jerome Powell. Fears about trade agreements before the August 1 deadline, alongside companies' ability to endure the tariff conflict, are testing market resilience amid their record-setting growth. Stocks have rebounded since their downturn in April as fund managers aggressively back the rally in risk assets. This week is pivotal as companies like Tesla Inc. and Alphabet Inc. announce their earnings. White House Press Secretary Leavitt indicated that President Donald Trump might issue further unilateral tariff letters before August 1 and mentioned that more trade agreements could potentially be finalised before the deadline.
This morning, the ONS reported that the UK government ran a deficit (PSNBex) of £20.7bn in June, exceeding market expectations by over £3bn. However, when viewed cumulatively, the deficit for the first quarter of the 2025-26 fiscal year aligns closely with the OBR’s monthly profile, totalling £57.8bn. Meanwhile, the cash-based measure of the government’s financing need for the same period has risen to £55.7bn, approximately £7bn higher than the OBR’s June projection. This measure is critical as it influences the arithmetic underpinning the gilt sales program. Signs of an overshoot suggest potential upward revisions to the financing remit, which the forthcoming Autumn Budget is likely to address. That said, given the possibility of revisions, timing discrepancies, and unforeseen shocks, the upside risks currently appear relatively modest. A closer look at the details reveals a significant surge in the debt interest bill, which increased by £7.4bn compared to the same period last year—a rise of 28.5%. On the revenue side, tax receipts growth remains robust, showing a year-on-year increase of 6.7% for the quarter. This suggests that much of the strain on public finances continues to stem from inflation-driven spending pressures.
Shares of cryptocurrency-related companies surged on Monday following a rise in ether prices to their highest level this year, coinciding with President Donald Trump signing a law regulating stablecoins in the U.S. Trump enacted the GENIUS Act late Friday, representing a significant victory for the crypto sector that has been advocating for a regulatory framework to enhance its legitimacy. The bill received bipartisan support in the House of Representatives, passing with a vote of 308 to 122 on Thursday, after approval from the Senate.
Overnight Headlines
Trsy's Bessent Urges Fed To Review Non-Monetary Policy Operations
Deutsche Bank: Powell Exit May Lift 30-Year Yield By 50bps
New Zealand Exports Drop Sharply, Trade Deficit Widens
RBA Minutes: July Rate Cut Ruled Out To Preserve ‘Cautious’ Strategy
Trump’s Tax Law To Add $3.4T To US Deficits, CBO Estimates
US SEC Plans Guardrails For Private Investments In Retirement Plans
Bank Of England Weighs Scrapping Plans For Digital Pound
JPMorgan Explores Lending Against Clients’ Cryptocurrency Holdings
SoftBank–OpenAI $500B AI Project Stalls At Launch Stage
AstraZeneca Pledges $50B US Investment Amid Pharma Tariff Risk
China Mutual Funds Hit Record $4.7T AUM, CSJ Reports
Nvidia’s China Return Seen Buys Time For Beijing’s Chip Push
NXP Semiconductors Sees Third-Quarter Revenue Falling
Crown Holdings Raises Guidance, Claims Strong Performance
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1620-25 (1.5BLN), 1.1650 (1BLN), 1.1700-05 (1.6BLN)
1.1725-30 (1.8BLN)
USD/CHF: 0.8000-05 (455M)
EUR/GBP: 0.8700 (200M)
GBP/USD: 1.3385-1.3400 (1.4BLN), 1.3450 (303M), 1.3475 (204M), 1.3495 (284M)
AUD/USD: 0.6475 (558M), 0.6500 (574M), 0.6550 (596M)
NZD/USD: 0.6000 (300M). AUD/NZD: 1.0950 (390M)
USD/CAD: 1.3630-35 (2.5BLN), 1.3710-20 (1.1BLN)
USD/JPY: 146.75 (925M), 147.00 (1.9BLN), 147.50 (471M), 147.80 (308M)
148.00 (384M), 148.25 (345M)M 148.75 (687M)
EUR/JPY: 173.50 (405M). AUD/JPY: 96.50 (350M)
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
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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!