Daily Market Outlook, July 9, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

Chinese stocks are poised to achieve their best closing figures in three years, as investors speculate on potential measures to alleviate deflationary pressures and invigorate the economy. In London, copper futures dropped following President Donald Trump’s latest tariff warnings.

The Shanghai Stock Exchange Composite Index increased by as much as 0.4%, reaching its highest point this year, and is on track for its best close since January 2022. The CSI 300 index, a key gauge of mainland China stocks, is also heading for its best closing value since December. Data released Wednesday indicated that China's factory deflation has continued for 33 months, while consumer prices saw an unexpected rise in June. In contrast, Asian shares experienced a slight dip as investors opted to avoid taking risks in light of Trump intensifying trade tensions. Treasuries declined for the fifth consecutive session as global demand for long-term government debt diminished amidst a series of bond auctions this week. The Dollar has seen a slight increase. Persistently weak inflation could pressure Chinese policymakers to enhance stimulus efforts to break a detrimental cycle of declining prices, profits, and wages. Investors are now closely watching Beijing’s upcoming July Politburo meeting for more substantial support measures following recent government initiatives to address factory overcapacity. In other developments, traders are being cautious as they assess the potential impact of escalating trade tensions, seeking clues on the future direction of stocks after they hit record highs last week. Trump reaffirmed his commitment on Tuesday to pursue his agenda of heavily taxing imports, following a series of tariff warning notices sent to trading partners, including South Korea and Japan. Crypto prices are showing signs of bouncing back after a tumultuous session Monday, influenced by uncertainty surrounding tariffs and trade conflicts involving the United States and its trading partners. Bitcoin is holding steady above 108K. 

The OBR’s fiscal risks and sustainability report highlights the UK’s longer-term challenges rather than evaluating the accuracy of its current forecasts. However, it’s far from light reading material. In essence, it outlines the looming hardships societies face in a world marked by trade wars, insecurity, ageing populations, and climate change. The UK's starting position is particularly precarious. Attempts to secure sustainable public finances have repeatedly faltered. Out of nine fiscal frameworks introduced since 2010, eight aimed to reduce debt as a share of GDP, yet debt has actually increased by 24 percentage points. While Covid and the energy crisis contributed to this rise, some of the damage was self-inflicted, with support measures described as “generous by international standards.” This trend has been enabled by repeated relaxations of fiscal rules. Recent policy decisions, including increased defence spending, the reversal of cuts to winter fuel payments, and scaled-back welfare reforms, add further pressure to the fiscal outlook. These developments are eroding the UK’s resilience to future economic shocks. Despite a high tax-to-GDP ratio, borrowing remains 3% of GDP above the level required to stabilise debt. The OBR admits that assessing the fiscal outlook cannot rely solely on central forecasts for tax, spending, borrowing, and debt but must account for the inevitability of unforeseen and often adverse shocks—a consideration currently lacking.

Today's key macro updates include the BoE Financial Stability Report, US wholesale inventories and sales data, FOMC meeting minutes, and speeches by ECB's Guindos and Nagel.

Overnight Headlines

  • EU Closes In On US Trade Deal, Testing Bloc’s Unity

  • China Producer Prices Fall Most Since 2023 As Deflation Lingers

  • RBNZ Holds OCR At 3.25% As Expected, Cites Inflation, Uncertainty

  • BoJ Wraps Up Stock Divestment, Weighs ETF Sale Timing

  • Trump Threatens 50% Tariff On Copper Imports, Rattling Markets

  • Goldman Sachs Hires Former UK Prime Minister Rishi Sunak

  • Supreme Court Allows Trump’s Plan For Mass Govt Lay-Offs To Proceed

  • Trump Says Putin Feeds US ‘Bullsh*t’ About Ending War In Ukraine

  • Trump Tariff ‘Blank Check’ Must Be Curbed, Appeals Court Told

  • Oil Steadies As US Stockpile Report Signals Supply Build

  • Gold Holds Decline As Extended US Negotiations Ease Trade Fears

  • UniCredit Commerzbank Stake Up To 20%; Italy Eases Merger Rules

  • Rivian-Backed Small EV Startup ‘Also’ Valued At $1B In New Round

  • Nissan To Scale Back EV Output Amid China Rare Earth Curbs

  • Apple Bids For Formula 1 Rights In US As Pitt’s Racing Film Soars

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.1500 (2.4BLN), 1.1600 (859M), 1.1650 (1.02BLN)

  • 1.1675 (503M), 1.1690-00 (3.4BLN), 1.1750 (398M)

  • 1.1770 (320M), 1.1800 (616M), 1.1850 (1.04BLN), 1.1900 (1.22BLN)

  • USD/JPY: 144.00-10 (1.6BLN), 144.50 (1.1BLN)

  • USD/CHF: 0.7950 (300M) , 0.7975 (380M), 0.7990-00 (587M)

  • EUR/GBP: 0.8620 (255M), 0.8650-55 (682M)

  • AUD/USD: 0.6300 (1.3BLN-55 (853M), 0.6600 (261M)

  • NZD/USD: 0.6000 (270M), 0.6075 (520M)

  • USD/CAD: 1.3500-10 (309M), 1.3515-25 (554M)

CFTC Positions as of the Week Ending July 4th 

  • Speculators have raised the net short position in CBOT US Treasury bonds futures by 2,672 contracts to a total of 104,457. They have also increased the net short position in CBOT US Ultrabond Treasury futures by 17,436 contracts, bringing it to 226,962. The net short position in CBOT US 10-year Treasury futures has been increased by 103,531 contracts, resulting in a total of 783,662. The CBOT US 5-year Treasury futures net short position has grown by 13,373 contracts to 2,477,002, while the CBOT US 2-year Treasury futures net short position is up by 50,444 contracts, totaling 1,280,648. 

  • Equity fund managers have boosted their net long position in S&P 500 CME by 3,352 contracts, reaching 844,576. Conversely, equity fund speculators have increased their net short position in S&P 500 CME by 29,824 contracts to 298,864. 

  • The Japanese yen net long position stands at 127,338 contracts, the Euro's at 107,537 contracts, the British pound's at 31,399 contracts, and the Swiss franc shows a net short position of -23,853 contracts. Bitcoin has a net short position of -1,756 contracts.

Technical & Trade Views

SP500 Pivot 5995

  • Daily VWAP bearish

  • 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 bullish

  • Above 1.3522 target 1.38

  • Below 1.34 target 1.3270

USDJPY Pivot 147

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Above 145.18 target 147.50

  • Below 144.76 target 139

XAUUSD Pivot 3365

  • Daily VWAP bearrish

  • Weekly VWAP bearish

  • Above 3420 target 3600

  • Below 3240 target 3000

BTCUSD Pivot 105k

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Above 105k target 118k

  • Below 98.3K target 95.5k