Daily Market Outlook, July 4, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

U.S. investors may have been feeling optimistic heading into the long Independence Day weekend, but that positivity did not extend to Asia. Confidence in the resilience of the U.S. economy, buoyed by unexpectedly strong monthly payroll figures, has quickly been overshadowed by uncertainty as President Donald Trump approaches the July 9 deadline for increased tariff rates. Despite earlier assurances from Trump and his team about a surge in trade agreements, the announcement of a deal with Vietnam brings the total to only three, which include preliminary agreements with Britain and China. Trump's stance on tariffs has adjusted accordingly: he mentioned that letters will be sent to trading partners on Friday outlining the duties they will incur on trade with the United States. Treasury Secretary Scott Bessent indicated a deal with India is forthcoming, but discussions with Japan and South Korea—initially seen as likely early successes—have been stalled for weeks. The deal with Vietnam also poses a risk of upsetting China by imposing 40% tariffs on so-called trans-shipments of products primarily made elsewhere (for example, China) to obtain a "Made in Vietnam" label. Some Asian nations may be hopeful they've taken sufficient steps to alleviate U.S. concerns and will only face the standard 10% tariff in their notifications. Thailand, for instance, expressed optimism today about potential positive outcomes following trade discussions with Washington. The EU is seeking an "agreement in principle" by July 9, but, as is often the case with such a large economic entity, satisfying all parties will be challenging. Brussels is preparing for any outcome, including the possibility of a return to reciprocal tariff escalations. One consensus among European diplomats is that any tariff relief must be immediate, or the deal would be off the table. Traders and investors must also consider the long-term implications of Trump’s extensive tax-cut legislation, which is set to become law, and its potential to increase the deficit by an estimated $3.4 trillion.  Global equities, led by Wall Street, may be reaching all-time highs, but this could leave ample space for a significant decline if Trump’s trade war turns sour again.

Last month’s mild payrolls beat was celebrated, ignoring underlying weaknesses. June data mirrors this, with a headline payroll gain of 147k (vs. 106k forecast) boosting Treasury yields and USD, yet private payrolls rose only 74k (vs. 100k expected). Government added 73k jobs, mostly teachers (63k). Healthcare led private gains (+39k), followed by social assistance (+19k), while productive sectors stagnated. Unemployment dipped to 4.1% due to a participation rate drop (62.3%, lowest since 2022). Hours worked fell (34.3 to 34.2), wage growth slowed (0.2% m/m, 3.7% y/y), and multiple jobholders near record highs signal income pressures. Weak survey data suggests this report lacks strength, markets await more detailed post-holiday analysis.

Revisions to PMIs usually fluctuate, but June's services PMI rose from 51.3 (preliminary) to 52.8 (final), rebounding from 49.0 two months ago. However, this isn’t entirely hawkish—employment indicators fell below 50, signaling job losses, and the output price index hit a near five-year low. Meanwhile, the BoE’s DMP survey indicated that CPI inflation expectations increased to 3.3% (up from 3.0%), while expected wage growth decreased to 3.6%. These mixed signals complicate MPC policy decisions. Additionally, meeting fiscal rules in the Autumn Budget may require significant tax hikes, potentially influencing expectations for BoE rate cuts as tighter fiscal policy could prompt looser monetary policy.

Overnight Headlines

  • Trump’s Tax Bill Clears House, Cementing Economic Policy Shift

  • Trump May Start Telling Nations New Tariff Rates On Friday

  • ASEAN Nations Pledge To Buy More From US Ahead Of Tariff Deadline

  • Hong Kong Defends FX Peg For Third Time In A Week

  • Japan Household Spending Jumps 4.7%, Most Since Summer 2022

  • Poll: RBA Exp To Cut For Third Time On July 8 As Economy Slows

  • Goldman Cuts Treasury Yield Forecasts On Rising Fed Cut Bets

  • Nvidia Briefly Poised To Become Most Valuable Company Ever

  • Meta Hires AI Startup Founder For Superintelligence Lab

  • Boeing Wins $2.8B US Strategic Satellite Contract

  • Trump, Putin Hold First Call Since Ukraine Weapons Pause

  • US Imposes Fresh Sanctions On Iran Oil Trade, Hezbollah

  • Oil Falls On OPEC+ Uncertainty And Tariff Volatility

  • Apollo-Backed Athora Acquires UK Insurer For $7.8B

  • India Bans Jane Street From Accessing Securities Market

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.1725-35 (465M), 1.1800 (361M), 1.1850 (555M)

  • USD/CHF: 0.7800 (560M), 0.8000 (200M)

  • EUR/CHF: 0.9350 (512M), 0.9500 (491M)

  • EUR/GBP: 0.8575-85 (262M). GBP/USD: 1.3820 (522M)

  • AUD/USD: 0.6500 (1.6BLN), 0.6600 (2.9BLN)

  • NZD/USD: 0.6100-10 (292M)

  • USD/JPY: 143.50-60 (1.3BLN), 144.00-05 (592M), 144.20 (305M)

  • 144.50 (250M), 145.00-10 (528M)

CFTC Positions as of the Week Ending June 27th 

  • Speculators have raised the net short position in CBOT US 5-year Treasury futures by 20,348 contracts, reaching 2,463,629. They have also reduced the net short position in CBOT US 10-year Treasury futures by 72,768 contracts, bringing it down to 680,131. The net short position for CBOT US 2-year Treasury futures has increased by 63,807 contracts, totaling 1,230,204. In CBOT US UltraBond Treasury futures, the net short position is up by 19,812 contracts, now at 209,526. Additionally, the net short position for CBOT US Treasury bonds futures has increased by 27,610 contracts, amounting to 101,785. 

  • Equity fund speculators have decreased their net short position in the S&P 500 CME by 50,029 contracts to 269,039, and equity fund managers have lowered their net long position by 1,646 contracts to 841,226. 

  • The net FX long positions: Japanese yen at 132,277 contracts, Euro at 111,135 contracts, British pound at 34,395 contracts, while the Swiss franc has a net short position of -20,944 contracts and Bitcoin holds a net short position of -2,161 contracts.

Technical & Trade Views

SP500 Pivot 5995

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Above 5995 target 6300

  • Below 5938 target 5800

EURUSD Pivot 1.1630

  • Daily VWAP bearish

  • Weekly VWAP bullish 

  • Above 1.1630 target 1.19

  • Below 1.1490 target 1.12

GBPUSD Pivot 1.3522

  • Daily VWAP bearish

  • Weekly VWAP bearish 

  • Above 1.3522 target 1.38

  • Below 1.34 target 1.3270

USDJPY Pivot 147

  • Daily VWAP bearish

  • Weekly VWAP bullish

  • Above 145.18 target 147.50

  • Below 144.76 target 139

XAUUSD Pivot 3365

  • Daily VWAP bullish

  • Weekly VWAP bullish 

  • Above 3420 target 3600

  • Below 3240 target 3000

BTCUSD Pivot 105k

  • Daily VWAP bullish

  • Weekly VWAP bearish

  • Above 105k target 118k

  • Below 98.3K target 95.5k