Daily Market Outlook, July 31, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

We are navigating an exceptionally eventful week, best described as the calm before the storm. Today's focus centres on corporate earnings, critical economic data releases, central bank decisions on interest rates, and developments in trade negotiations ahead of the new U.S. tariffs set to take effect this Friday. The yen climbed immediately after the Bank of Japan opted to maintain its interest rates, as expected. Market attention is now shifting toward an upward revision in inflation projections, with Governor Ueda scheduled to speak shortly. Speculation is mounting among traders that rate hikes could become a possibility later this year. As the second-quarter earnings season reached its midpoint, Nasdaq futures jumped 1.3% following stellar earnings reports from Microsoft and Meta Platforms. Meanwhile, the U.S. dollar held steady after hitting a two-month high, positioning itself for its first monthly gain of the year. “This earnings season has been remarkable, which is a major reason U.S. stocks remain resilient. However, the full impact of the tariffs is yet to unfold,” noted David Chao, Invesco’s global market strategist for Asia-Pacific, based in Singapore. The MSCI index tracking Asia-Pacific shares, excluding Japan, dipped but is still on course for its fourth consecutive monthly gain. In Hong Kong, stocks fell 1.1% after official PMI figures revealed weaker-than-expected activity for July. Copper futures plunged following U.S. President Donald Trump’s announcement of a 50% tariff on copper imports. Meanwhile, the Korean won appreciated slightly after Trump unveiled a 15% tariff on South Korean imports. South Korea, in turn, plans to invest $350 billion in U.S. projects and purchase $100 billion worth of U.S. energy products. This announcement is the latest in a series of rapid trade policy shifts leading up to the August 1 deadline set by Trump to finalise trade agreements before imposing what he has dubbed "Liberation Day" tariffs. Additionally, Trump has announced a range of tariffs impacting goods from Brazil as well as low-value foreign shipments.

Banks have released insights from their monthly FX hedge rebalancing models, highlighting a recurring theme of USD selling despite its recent rebound. CACIB flagged broad-based USD selling earlier this week, with the strongest signal against EUR. Their corporate flow model indicates a tendency for EUR buying and GBP selling as the month draws to a close. Nomura’s month-end model similarly points to widespread USD selling, with the most notable signal against EUR. Deutsche Bank, while factoring in this week’s U.S. Federal Reserve and Bank of Japan policy announcements alongside July’s upcoming U.S. employment data, expects a slightly weaker influence from month-end models. Nonetheless, based on equity performance, they project USD selling against CHF, JPY, EUR, and NZD, with the strongest signal directed at NOK. Moreover, Deutsche Bank highlights seasonal patterns for late July, noting that USD strength tends to emerge against AUD and NOK on the first day of August.

Overnight Headlines

  • Trump Says US Strikes Trade Deal With South Korea

  • China’s July Mfg PMI Contracts Sharply, Misses Forecast

  • BoJ Keeps Rates Steady, Raises Inflation Forecast

  • Japan Industrial Output Surges 1.7% In June

  • Aussie Retail Sales Soar 1.2% In Final Monthly Report

  • Microsoft Tops $4T Market Cap, Beats On Cloud Earnings

  • Meta Shares Jump As CEO Sets ‘Superintelligence’ Vision

  • Qualcomm Earnings Beat On Smartglasses Growth

  • Robinhood Surges As Crypto Revenue Almost Doubles

  • Ford Warns Profit May Drop Up To 36% On $2B Tariff Tab

  • Novo Nordisk Falls On US Competition, CEO Transition Concerns

  • Trump, Dimon Discuss Trade, Financial Regulation

  • Brazil Central Bank Pauses Tightening After Seven Hikes

  • China–US Stockholm Talks Boost Trade Confidence

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.1400 (1.2BLN), 1.1420-30 (881M), 1.1450 (624M)

  • 1.1460-65 (1.3BLN), 1.1475-80 (1.7BLN), 1.1485-1.1500 (2.8BLN)

  • USD/CHF: 0.8200 (392M)

  • GBP/USD: 1.3250 (530M), 1.3315 (608M), 1.3375 (304M), 1.3410 (520M)

  • EUR/GBP: 0.8605 (175M), 0.8660-70 (592M)

  • AUD/USD: 0.6450-55 (689M), 0.6465 (1BLN), 0.6495-0.6500 (1.2BLN)

  • NZD/USD: 0.5965 (652M). AUD/NZD: 1.0950 (251M)

  • USD/CAD: 1.3670-75 (1.1BLN), 1.3740 (744M), 1.3750-55 (452M), 1.3800 (588M)

  • USD/JPY: 147.40-50 (836M), 147.70-75 (426M), 148.00 (557M), 149.75 (400M)

  • EUR/JPY: 169.00 (300M), 169.90-170.00 (230M)

  • AUD/JPY: 95.30 (938M)

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