Daily Market Outlook, July 29, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Asian stocks declined for a third consecutive day as enthusiasm from recent trade agreements diminished, with markets adopting a buy-the-rumour-sell-the-news posture, and investors remained cautious in a week full of economic reports and corporate earnings. The MSCI Asia-Pacific index fell, with Hong Kong shares leading the decline. The dollar continued its advance after its largest increase since May. S&P 500 futures inched up after the index experienced little movement on Monday but ultimately closed at a record high. Futures for European stocks increased. Meanwhile, the euro dropped after experiencing its most significant decline in over two months during the previous session.
The optimism surrounding recent tariff agreements is waning, as investors shift their focus to critical economic indicators, including jobs, inflation, and overall economic activity. Attention will be on the Federal Reserve's policy announcement on Wednesday, where it is anticipated that officials will maintain current interest rates, followed by earnings reports from four major tech companies. European leaders defended the trade agreement reached with Trump, but industry representatives in Germany cautioned that the deal leaves the auto sector vulnerable and could diminish competitiveness for European firms. The Dutch minister for foreign trade described the agreement as “not ideal” and urged the commission to keep negotiating with the US. Additionally, US and Chinese officials completed the first of two days of discussions aimed at extending their tariff agreement past a mid-August deadline and exploring how to strengthen trade ties while ensuring economic security. According to US Trade Representative Jamieson Greer, the US will require further negotiations with India to reach an agreement.
The British Retail Consortium (BRC) reported shop prices rose 0.7% y/y in July, up from 0.4% in June, driven by a 4.0% rise in food prices, while non-food prices fell 1.0% y/y. Supply issues (e.g., meat, tea) and last year’s Budget tax hikes contributed to food inflation. While the MPC targets overall CPI inflation, Deputy Governor Ramsden noted food prices significantly influence household inflation expectations. Despite rising food prices, Ramsden is likely to vote for a rate cut in August, but the food price surge raises caution about further rate cuts due to inflation risks.
The euro dropped over 1% against the US Dollar yesterday, with Schatz yields also declining. Markets reacted to the US-EU trade deal imposing 15% tariffs on most EU exports, which could hinder euro area growth and inflation, as suggested by the ECB’s June projections. While these tariffs are less severe than the previously discussed 30%, they exceed the 10% baseline assumed by the ECB. Despite ECB President Lagarde’s optimistic tone on trade last week, markets interpreted the higher tariffs negatively. Following the ECB meeting, the likelihood of a September rate cut fell from ~50% to ~15%. However, Governing Council member Kazimir hinted that if Monday’s market reaction proves accurate, rate cuts might be considered in meetings beyond September.
Today's Key Calendar Events: Bank of England money and credit data, U.S. house prices, consumer confidence, trade balance, job openings, and ECB inflation expectations.
Overnight Headlines
Apple To Shutter A Retail Store In China For The First Time Ever
PBoC Finds Consumer Mood Is Turning Darker Even As Economy Grows
Japan Ruling Party To Discuss Prime Minister Ishiba’s Fate Soon
Japan 2-Year Bond Sale Draws Strongest Demand Since Oct
Trump Administration Weighs Patent System Overhaul To Raise Revenue
Trump Blocks Taiwan’s President Lai From New York Stopover
EU Defends Trade Deal Amid Mounting Criticism
ECB Staff Accuse Lagarde Of Running ‘Unaccountable Legal Fortress’
UK's Reeves Faces Calls To Increase Taxes On £15B Gambling Industry
UBS Orders Bankers To Scale Back Sale Of Complex FX Products
Aussie Lender CBA To Cut 45 Jobs In AI Shift, Draws Union Backlash
Whirlpool Cuts Dividend, FY Profit Guidance As Tariffs Hurt Results
Celestica Boosts Revenue Guidance Again As AI Demand Booms
Cadence Design Systems Ups Outlook Amid Increasing AI Demand
EssilorLuxottica: Ray-Ban Meta Smart Glasses Revenue Tripled
British Lender Shawbrook Said To Pick Banks For London IPO
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1500 (763M), 1.1540-50 (1.2BLN), 1.1600 (1.2BLN), 1.1650 (2.4BLN)
USD/CHF: 0.7950 (601M), 0.8000 (470M)
GBP/USD: 1.3290-1.3305 (211M), 1.3360 (210M)
AUD/USD: 0.6530-40 (702M), 0.6550 (240M), 0.6600 (1BLN)
NZD/USD: 0.5905 (295M), 0.5945 (293M), 0.6080 (292M), 0.6125 (290M)
AUD/NZD: 1.1000 (335M)
USD/CAD: 1.3710-15 (793M), 1.3760 (230M), 1.3770-75 (871M)
USD/JPY: 147.50-55 (1.2BLN), 148.00 (1.1BLN), 148.15 (417M)
148.75 (474M), 149.00 (373M)
EUR/JPY: 172.50 (830M), 175.50 (1.1BLN)
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 Bullish Above 6380 Target 6500
Weekly VWAP Bullish Above 6300 Target 6515
EURUSD
Daily VWAP Bearish Below 1.17 Target 1.15
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 Bullish Above 120k Target 124k
Weekly VWAP Bullish Above 114k 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!