Daily Market Outlook, July 25, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

A global stock rally that lasted for seven days stalled in Asia due to uncertainty regarding the Federal Reserve's plans for rate cuts, which dampened investors' risk appetite. The MSCI All Country World Index declined, marking the end of the longest winning streak for Asian stocks since January. In Hong Kong, shares fell by 1.1%, while the Topix index decreased by 0.8% after reaching a record-high close on Thursday. The dollar increased following President Donald Trump's remarks that there was no need to dismiss Federal Reserve Chair Jerome Powell. Treasury yields remained steady after two days of decline. The strong employment data released on Thursday weakened the likelihood of interest rate cuts by the Fed. While traders do not expect a rate reduction in the upcoming Fed meeting next week, projections for cuts later this year have been reduced to fewer than two after data indicated a sixth consecutive week of falling jobless claims. Trading desks at companies like Goldman Sachs and Citadel are advising clients to purchase inexpensive hedges against potential losses in US stocks as various risks threaten the market's record growth. Major stock indexes have surged higher as the US secures trade agreements during a robust earnings season. Wall Street's so-called fear gauge, the VIX, is at its lowest point since February, and the S&P 500 Index has increased by 28% since April 8. The S&P 500 reached a new record on Thursday, its 10th record in just 19 days, driven by gains in the tech sector.

The ECB kept the deposit rate at 2.0%, with President Lagarde delivering a hawkish outlook. Growth prospects are improving, supported by consumption, investment, and medium-term boosts from defence and infrastructure spending. While growth risks remain tilted to the downside due to global trade uncertainties, quick resolution of tensions could further enhance growth. Inflation is expected to slightly undershoot next year but remains anchored near the 2% target, aligning with the ECB’s current policy stance. The tone suggests no imminent rate cuts, with policy rates likely stable for some time—a positive for the EUR.

Core retail sales (excluding fuel) rose 0.6% month-on-month in June, below expectations, following a revised -2.9% drop in May. Favourable weather boosted food store sales, but Q2 retail sales volumes grew only 0.2% quarter-on-quarter, with inflation limiting growth. The core price deflator increased to 1.6% year-on-year, signalling rising prices rather than higher consumption. Consumer sentiment remains weak, as reflected in July's GfK survey, which fell to -19, well below the long-term average of -10.

Next week’s data calendar promises to be eventful, particularly in the US, making up for the lighter schedule this week. Key central bank decisions are expected from the Federal Reserve (Fed) and Bank of Canada (BoC) on Wednesday, followed by the Bank of Japan (BoJ) on Thursday, although no changes in monetary policy are anticipated. Additionally, preliminary Q2 GDP figures for both the euro area and the US will be released on Wednesday. The Atlanta Fed’s GDP Now model forecasts a trade-driven rebound to 2.4% quarter-on-quarter SAAR for the US, recovering from Q1’s -0.5% SAAR, though signs of softening private consumption persist.

Inflation data will also take centre stage. The US June PCE index, due Thursday, is expected to reflect the upward trend seen in CPI earlier in July, while the euro area’s flash inflation reading for July, set for Friday, will follow earlier member state results on Thursday. US Treasury refunding plans, scheduled for Monday, will attract attention amid financing concerns linked to the "One Big Beautiful Bill." Employment data will dominate the week, with job openings on Tuesday, the ADP employment report on Wednesday, and the monthly BLS jobs report on Friday. The quarterly Employment Cost Index, released Thursday, will also be closely monitored by the Fed.

Adding to the busy lineup are US consumer confidence figures on Tuesday, final July manufacturing PMIs on Friday, and the ISM survey, also on Friday. Meanwhile, President Trump’s revised tariff deadline looms on Friday, further heightening market angst.

Overnight Headlines

  • Trump, Powell Clash Publicly Over Fed Renovation Costs

  • PIMCO: Trump Risks Revolt If Fed Independence Undermined

  • Tokyo Inflation Slows But Stays Above BoJ Target

  • France To Recognise Palestinian State In September Says Macron

  • Intel To Cut 15% Of Staff, Slash Investments Amid Revenue Beat

  • Goldman Scraps 2025 ECB Cut Call, Sees Terminal Rate At 2%

  • Trump Hails Australia’s Move To Ease US Beef Curbs

  • UK PM Starmer To Press Trump Over UK Steel Tariffs

  • UK Savings Gauge Hits Highest Level Since 2007

  • Honeywell Raises FY Forecast On Aerospace Demand

  • Puma Cuts Guidance Amid Tariff Pressure, Sales Decline

  • Nvidia Chips Worth $1B Smuggled To China Despite US Controls

  • Samsung Pushes Diverse AI Agents In Galaxy Devices

  • Charles Schwab Shares Jump On $20B Buyback Plan

  • China Disburses Bulk Of $103B Investment Budget

  • Paramount–Skydance Merger Wins FCC Approval

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.1700 (1.1BLN), 1.1740-50 (3.6BLN), 1.1800 (3.1BLN)

  • EUR/CHF: 0.9325 (225M), 0.9375 (177M)

  • EUR/GBP: 0.8725 (506M), 0.8750 (648M)

  • GBP/USD: 1.3450-60 (270M), 1.3540 (346M)

  • AUD/NZD: 1.0850 (316M), 1.1050 (543M)

  • USD/CAD: 1.3600 (941M), 1.3620-30 (1.4BL), 1.3670-85 (1BLN), 1.3700 (1.1BL)

  • USD/JPY: 146.00 (1.4BLN), 146.50-60 (630M), 146.75-85 (851M)

  • 147.00-05 (957M), 147.25 (320M), 147.70-75 (425M)

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 Bullish Above 1.1710 Target 1.19

  • Weekly VWAP Bullish Above 1.1640 Target 1.19

GBPUSD 

  • Daily VWAP Bullish Above 1.3580 Target 1.3670

  • Weekly VWAP Bearish Below 1.3580 Target 1.39

USDJPY 

  • Daily VWAP Bearish Above 1.45 Target 1.48

  • Weekly VWAP Bullish Above 1.45 Target 1.51

XAUUSD

  • Daily VWAP Bullish Above 3320 Target 3500

  • Weekly VWAP Bearish Below 3350 Target 3290

BTCUSD 

  • Daily VWAP Bearish Above 120k Target 124k

  • Weekly VWAP Bullish Above 114k Target 130k