Daily Market Outlook, August 1, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
A worldwide stock selloff has now reached its sixth consecutive day, marking the longest losing streak since September 2023, following President Donald Trump’s announcement of new tariff rates. Despite two days of solid earnings from major tech companies, market sentiment remained low. The MSCI All Country World Index declined, along with the MSCI Asian stock index which also fell for its sixth straight session, representing its longest slump this year. South Korean stocks plunged by 3.4%. Trump introduced a range of new tariffs, comprising a 10% global minimum and duties of 15% or more on countries with trade surpluses with the US. The dollar remained stable on Friday following its first monthly increase since Trump took office in January. The Taiwan dollar declined for the seventh day in a row, the longest drop since June 2023, due to a 20% tariff rate imposed on the island. Concurrently, the Swiss franc slightly weakened after Trump established a 39% tax on exports to the US from Switzerland. These developments indicated that fears about tariffs and economic growth were beginning to overshadow the AI-driven enthusiasm that had supported the rise of major tech stocks. While artificial intelligence continues to be a cornerstone of long-term market optimism, investors are preparing for possible trade disruptions as the US and its key partners contemplate new tariffs.
July PCE inflation data came in slightly higher than expected, with headline inflation rising 0.28% m/m (median 0.3%) and an upward revision to May lifting the y/y rate to 2.6% (forecast 2.5%). Core PCE rose 0.26% m/m (survey 0.3%) and 2.8% y/y, steady from May’s revised figure but above expectations. Goods prices saw their largest m/m increase since January, trending higher, while services prices softened slightly without convincing disinflation. Fed Chair Powell’s cautious tone on inflation risks from tariffs remains justified, as PCE growth is unlikely to hit target without a demand slowdown. The data may bolster Fed hawks and US dollar bulls until non-farm payrolls data is released.
July’s non-farm payrolls are projected to moderate to 106k, down from June’s 147k, due to a prior surge in government hiring, mainly teachers. Private employment growth is expected to rebound to 100k from 74k, driven by healthcare, which has been the key contributor to 2023’s job gains (68.5k of the 130k monthly average). Consistency in healthcare hiring means only one other sector, like professional and business services, needs a solid performance to meet expectations. While business surveys show a soft employment backdrop, jobless claims data has improved. Unemployment is expected to tick up to 4.2%, with risks stemming from a stronger-than-expected report potentially amplifying tariff concerns and reinforcing hawkish rate outlooks, boosting the US dollar.
The upcoming week’s economic calendar is sparse, with the Bank of England’s (BoE) August MPC decision (Thu) as the key highlight. Final July services PMIs (Tue) are unlikely to deviate from flash estimates, while the US services ISM (Tue) stands out. In Europe, notable releases include June PPI (Tue), retail sales (Wed), the ECB bulletin, and German data on factory orders (Wed), industrial production, and trade (Thu). The BoE is expected to cut the Bank Rate by 25bps to 4.0%, with guidance likely remaining cautious, describing future rate cuts as "gradual and careful." A 2-5-2 split vote is anticipated, reflecting diverging views among MPC members. Weak GDP and labor market data, alongside high inflation, underline the trade-off between below-potential output and above-target inflation, explaining the split vote and vague guidance.
Overnight Headlines
Trump Sets Tariffs Ahead Of Aug 1 Deadline With 10% Baseline Rate
Trump Gives Major Drugmakers 60 Days To Cut US Prices
China’s Caixin Manufacturing PMI Slips Into Contraction At 49.5
Trump’s Tariffs, Highest Since WWII, Set To Cut Growth; Boost Inflation
Amazon Projects Profit That Underwhelms On Expense Of AI Race
Coinbase Launching Tokenised Stocks, Predictions Markets For US Users
Apple Revenue Tops Estimates On Strength Of iPhone, China Market
China Pauses US-Bound Company Investment Amid Trade War
Japan’s Kato Voices Concern With Yen At Weakest Since March
Russia Is Committed To Supporting Syria’s Rebuilding, Putin Says
Chevron To Deliver Oil To Venezuela Under New Production Terms
Trump Rejigs Tariff Rates; Levies 40% Duties On All Transshipped Goods
Anthropic Joins OpenAI, xAI In Seeking Funds From Middle East
Goldman Urges Caution As Global Credit Spreads Hit 2007 Lows
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1380 (283M), 1.1400-05 (2.7BLN), 1.1425-30 (1.2BLN)
1.4440-60 (2.9BLN), 1.1495-00 (1.6BLN), 1.1600-10 (2.34BLN)
1.1650-60 (1.8BLN)
USD/JPY: 149.00 (674M), 149.50 (210M), 150.00 (1.43BLN)
150.20-25 (575M), 151.00 (817M), 151.25 (350M)
USD/CAD: 1.3715-25 (548M), 1.3770-80 (615M), 1.3800 (287M)
CFTC Positions as of the Week Ending July 25th
Speculators have reduced their net short position in CBOT US 5-year Treasury futures by 35,604 contracts, bringing the total to 2,469,924. They have also decreased their net short position in CBOT US 10-year Treasury futures by 22,843 contracts, resulting in a total of 749,534 contracts. Additionally, speculators cut their net short position in CBOT US 2-year Treasury futures by 51,208 contracts to 1,248,652. In contrast, they increased their net short position in CBOT US UltraBond Treasury futures by 3,725 contracts, bringing it to 232,343. The net short position in CBOT US Treasury bonds futures was trimmed by 47,265 contracts to 82,879.
Equity fund speculators raised their net short position in the S&P 500 CME by 1,292 contracts to 330,763, while equity fund managers reduced their net long position in the S&P 500 CME by 11,519 contracts to 850,898.
The net short position for Bitcoin stands at -1,852 contracts. The Swiss franc has a net short position of -26,065 contracts, while the British pound shows a net long position of 570 contracts. The euro's net long position is at 125,515 contracts, and the Japanese yen has a net long position of 106,645 contracts.
Technical & Trade Views
SP500
Daily VWAP Bearish Below 6375 6380 Target 6269
Weekly VWAP Bullish Above 6300 Target 6515
EURUSD
Daily VWAP Bearish Below 1.17 Target 1.14
Weekly VWAP Bullish Above 1.1640 Target 1.19
GBPUSD
Daily VWAP Bearish Below 1.3450 Target 1.32
Weekly VWAP Bearish Below 1.3580 Target 1.32
USDJPY
Daily VWAP Bullish Above 1.45 Target 1.48
Weekly VWAP Bullish Above 1.45 Target 1.51
XAUUSD
Daily VWAP Bearish Above 3320 Target 3500
Weekly VWAP Bearish Below 3350 Target 3290
BTCUSD
Daily VWAP Bearish Below 117k Target 112k
Weekly VWAP Bullish Above 114k Target 130k
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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!