Daily Market Outlook, April 7, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute...

Asian stock markets are in a bloodbath on Monday, following another significant sell-off from Wall Street on Friday, amid ongoing concerns about a global trade war after China announced retaliatory tariffs on US goods in response to President Donald Trump's new levies, which could fuel inflation and harm the global economy. Asian markets mainly closed lower on Friday.

China announced that a 34% tariff will be put on all imported goods from the United States beginning April 10, while Canada and the European Union are also contemplating countermeasures. The new duty equals Trump's planned "reciprocal tariff" on China, but when the new charges are combined with current duties, the country will face a 54 percent effective rate. China described Trump's tariff plan as a "typical unilateral bullying practice" that is "inconsistent with international trade rules." In a post on Truth Social, Trump said that China "played it wrong" and "panicked," calling the action "the one thing they cannot afford to do.". Even though Beijing promised stimulus, the Nikkei fell 6% and Chinese blue chips fell roughly 7% in Asia. Taiwan lost almost 10% after a break as Trump's high levies threaten the supply lines that so much of the world's commerce relies on.  In several markets, Taiwan's short-selling ban tripped circuit breakers. The markets' losses worried dealers that investors would sell valuable assets to pay margin calls, causing a self-fueling fire sale.

According to JPMorgan, there is now a 60% chance of a U.S. recession and rate cuts by the Fed between June and January of next year, which would leave the funds rate at about 3%.  The December Fed funds contract was up an incredible 30 basis points this morning before reversing that to 16 ticks, indicating that futures markets were also trending in that direction.

China appears ready for the battle, partly because it sees an opportunity to replace the United States as the trading partner one can rely on.  Furthermore, when the trade ministers of the area gather later on Monday, there might be further allusions of EU reprisals. All of this is happening as the U.S. earnings season is ready to begin with big banks on Friday. It will be a courageous CEO who has anything but a cautious  projection for profits and sales.

Overnight Newswire Updates of Note

  • Trump Tariffs Risk Large Euro-area ‘Demand Shock’, Central Banker Warns

  • US Defense Sec Hegseth To Visit Panama, US Raises Pressure Over Canal

  • Goldman Raises 12-Month US Recession Odds To 45pc From 35pc

  • VIX Surge Indicates ‘Panic’ As Stock Rout Accelerates Globally

  • Evercore ISI Is Latest Firm On Wall Street To Cut S&P 500 Target

  • Treasuries Star As A Haven Even As Trump Fans Stagflation Fears

  • JGB Yields Slide; Market Boosted By Likely Safe-Haven Demand

  • China Reserves Firepower For Trump Trade Battle

  • China: Rare Earth Export Curb Won’t Hurt Global Supply Chain

  • Copper’s Bull Run Turns Into A Rout As Reality Of Tariffs Bites

  • Goldman Cuts 2026 Oil Forecasts On Recession Risk, OPEC+ Supply

  • Saudis Slash Oil Prices To Asia After Surprise Output Hike

  • Greenpeace Raises Threat Of New Legal Challenge To UK Oil, Gasfields

  • UK PM Vows Steps To Bolster UK Against Trump Tariff Threat

  • France Suggests Targeting Big Tech’s Data Use In Response To US Tariffs

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.1000 (1.1BLN), 1.1030-35 (1BLN), 1.1050-55 (2BLN)

  • 1.1100 (250M), 1.1120 (601M), 1.1150 (251M)

  • EUR/CHF: 0.9575 (420M)

  • GBP/USD: 1.3050 (344M)

  • AUD/USD: 0.6180 (951M), 0.6200 (1.6BLN), 0.6240 (515M), 0.6300 (1.4BLN)

  • 0.6350 (2.3BLN), 0.6400 (550M)

  • USD/CAD: 1.4050-60 (1.2BLN), 1.4075 (340M), 1.4100 (620M)

  • 1.4135 (355M), 1.4150 (584M)

  • USD/JPY: 145.00 (270M), 145.75 (300M), 147.00 (1.4BLN)

CFTC Data As Of 4/4/25

  • British pound net long position is 34,626 contracts.

  • Euro net long position is 51,835 contracts

  • Japanese yen net long position is 121,774 contracts

  • Bitcoin net long position is 491 contracts

  • Swiss franc posts net short position of -42,764 contracts

  • Speculators trim CBOT US Treasury bonds futures net short position by 5,627 contracts to 32,648

  • Speculators increase CBOT US Ultrabond Treasury futures net short position by 21.663 contracts to 254,029

  • Speculators increase CBOT US 2-Year Treasury futures net short position by 44,805 contracts to 1,226,391

  • Speculators increase CBOT US 10-Year Treasury futures net short position by 53,173 contracts to 863,263

  • Speculators increase CBOT US 5-Year Treasury futures net short position by 121,590 contracts to 2,021,677

  • Fund Managers cut S&P 500 CME net long position by 37,007 contracts to 878,833

  • Equity Fund Speculators increase S&P 500 CME net short position by 28,330 contracts to 265,197


Technical & Trade Views

SP500 Pivot 5790

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Seasonality suggests bullishness into late April

  • Above 5885 target 5950

  • Below 4951 target 4755

EURUSD Pivot 1.0750

  • Daily VWAP bullish

  • Weekly VWAP bullish 

  • Seasonality suggests bearishness into the end of April

  • Above 1.0750 target 1.11

  • Below 1.0690 target 1.0550

GBPUSD Pivot 1.28

  • Daily VWAP bearish

  • Weekly VWAP bearish 

  • Seasonality suggests bullishness into late April

  • Above 1.2850 target 1.32

  • Below 1.2790 target 1.2660

USDJPY Pivot 150.50

  • Daily VWAP bearish

  • Weekly VWAP bullish

  • Seasonality suggests bullishness into Apr 9th

  • Above 1.52 target 153.80

  • Below 150.50 target 145

XAUUSD Pivot 2950

  • Daily VWAP bearish

  • Weekly VWAP bullish 

  • Seasonality suggests bearishness into mid/late April

  • Above 2900 target 3100

  • Below 2880 target 2835

BTCUSD Pivot 90k

  • Daily VWAP bearish

  • Weekly VWAP bearish 

  • Seasonality suggests bullishness into Apr 9th

  • Above 97k target 105k

  • Below 95k target 65k