Daily Market Outlook, September 5, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

A surge in Wall Street stocks extended into Asia, supported by further signs of a cooling labour market that heightened expectations for a Federal Reserve interest rate cut this month. Asian stock markets gained, with mainland China's markets bouncing back after a decline on Thursday. Futures for the S&P 500 rose as the index achieved a new all-time high. Contracts also suggested a positive opening for European markets. Japanese shares climbed following Trump's issuance of an executive order to formalise his trade agreement with Japan. Treasuries remained stable after the prior day’s increase, with the sensitive US two-year yield hovering close to a one-year low. Money markets are almost entirely pricing in a Fed rate cut, with at least two cuts projected by the year's end. The Dollar weakened against its Group-of-10 peers, while gold prices increased. In other developments, Trump announced an executive order to implement his trade deal with Japan, which includes a maximum 15% tariff on most imports from the US. This agreement, reached in July and featuring a commitment from Japan to create a $550 billion US investment fund, had yet to be finalised as negotiations continued between Washington and Tokyo. Oil prices dropped for a third consecutive day, heading for a weeklong decline ahead of an OPEC+ meeting that may approve another increase in supply.

US labour market data has shown consistent weakness throughout the summer. Downward revisions to the most recent payrolls report align with weaker JOLTS figures earlier this week, alongside slowing ADP numbers (+54k in August), rising Challenger job cuts, and softer survey data. The ISM reports also indicate declining headcounts across manufacturing and services sectors. Expectations are that this slowdown will be reflected in the August non-farm payroll data, with a median forecast of 75k jobs added month-over-month, slightly above the initially reported 73k for July. Markets remain sensitive to potential further downward revisions, especially with the first estimate of the annual revision set for release next Tuesday.Although some analysts suggest that this slower pace of payroll growth is near the breakeven rate needed to maintain stable unemployment—partly due to reduced labour supply from lower immigration—the unemployment rate is still projected to rise by 0.1 percentage points to 4.3%. Traders will also monitor the participation rate, which recently fell to 62.2%, its lowest level since October 2022 when the market was recovering from the pandemic. Any further decline could heighten concerns within the Federal Reserve that the labour market is transitioning from equilibrium to excessive slack.

The week ahead promises heightened activity in financial markets, driven by key events across regions. In France, Monday's confidence vote in the government could set the tone for market dynamics early in the week. Meanwhile, Fitch’s sovereign rating review, scheduled for Friday, will likely attract significant attention. On Wednesday, EU President Von der Leyen’s State of the Union address may touch on recent political and economic developments, potentially influencing discussions during Thursday’s ECB Governing Council meeting press conference. While no changes to policy rates are expected, revisions to staff macroeconomic projections are anticipated to be minimal. Additionally, several key indicators from EU member states will be released, including German trade and industrial production figures on Monday and final August CPI prints on Friday.

In the U.S., focus will centre on inflation data, with PPI due Wednesday and CPI on Thursday. Before that, Tuesday's annual benchmark revisions to payroll employment could prove pivotal, particularly if weaker lower-frequency surveys pull down higher-frequency estimates of firm births and deaths. This might solidify expectations for a Fed rate cut. 

In the UK, Friday’s release of July’s monthly GDP estimate will provide an initial snapshot of Q3 growth, helping to assess whether it aligns with the Bank of England’s forecast of 0.3% quarter-on-quarter expansion.

Overnight Headlines

  • Trump Signs Order Cementing Japan Tariff Deal With 15% Rate

  • Broadcom Gives Upbeat Forecast In Sign AI Demand Remains Strong

  • Lululemon Falls On Slashed Outlook As Sales Rut Persists

  • Xi Unites World Leaders Sick Of Being Pushed Around By Trump

  • US And Taiwanese Defence Officials Held Secret Talks In Alaska

  • Fed’s Williams Sees Gradual Cuts; Lets Data Drive When They Happen

  • Fed's Goolsbee: Labour Market Might Be Deteriorating

  • Japan’s Wages Gain Most In Seven Months, Backing Rate Hike Case

  • Markets Brace For Volatility Amid Trump’s Fed Maneuvers

  • Nvidia Boosts Lambda With $1.5B Deal To Rent Its Own AI Chips

  • Intel Says 2026 Will Be Pivotal Year For Its Manufacturing Tech

  • Smaller Banks Tackle $395B Bond Headache With Share Sales

  • Anthropic To Stop Services To Majority Chinese-Owned Groups

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.1600 (EU2.64 billion), 1.1550 (EU1.69 billion), 1.1800 (EU1.27 billion)  

  • USD/JPY: 146.00 ($2.36 billion), 147.00 ($1.12 billion), 144.45 ($766.1 million)  

  • AUD/USD: 0.6400 (AUD1.12 billion), 0.6500 (AUD1.09 billion), 0.6600 (AUD1.02 billion)  

  • USD/CAD: 1.3860 ($743.8 million), 1.3850 ($556 million), 1.3730 ($495 million)  

  • USD/BRL: 5.3000 ($560 million), 5.4000 ($390 million)

CFTC Positions as of the Week Ending August 29 

  • Speculators have reduced their net short position in CBOT US Treasury bonds futures by 15,030 contracts, bringing the total to 36,013. They have also increased their net short position in CBOT US Ultrabond Treasury futures by 6,783 contracts, resulting in a total of 248,945. Speculators have cut their net short position in CBOT US 10-year Treasury futures by 61,687 contracts, now totaling 883,829. The net short position in CBOT US 5-year Treasury futures has been trimmed by 44,412 contracts, down to 2,463,971. Meanwhile, the net short position in CBOT US 2-year Treasury futures decreased by 61,457 contracts to 1,263,082. 

  • Equity fund managers have boosted their net long position in S&P 500 CME by 3,284 contracts, leading to a total of 867,359. In contrast, equity fund speculators have increased their net short position in S&P 500 CME by 62,459 contracts, now totaling 428,262. 

  • The net long position in Japanese yen stands at 84,484 contracts, while the euro net long position is at 123,039 contracts. The British pound has a net short position of -31,353 contracts, and the Swiss franc shows a net short position of -26,978 contracts. Lastly, Bitcoin holds a net short position of -372 contracts..

Technical & Trade Views

SP500

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 6440 Target 6600

  • Below 6420 Target 6370

EURUSD 

  • Daily VWAP Bearish 

  • Weekly VWAP Bullish

  • Below 1.1750 Target 1.15

  • Above 1.18 Target 1.1910

GBPUSD 

  • Daily VWAP Bearish 

  • Weekly VWAP Bullish

  • Below 1.36 Target 1.30

  • Above 1.3650 Target 1.3850

USDJPY 

  • Daily VWAP Bullish 

  • Weekly VWAP Bearish

  • Below 1.49 Target 1.45

  • Above 1.51 Target 1.54

XAUUSD

  • Daily VWAP Bullish 

  • Weekly VWAP Bullish

  • Above 3450 Target 3600

  • Below 3300 Target 3260

BTCUSD 

  • Daily VWAP Bullish 

  • Weekly VWAP Bearish

  • Above 110k Target 118k

  • Below 109k Target 105k