Daily Market Outlook, April 11, 2025

Daily Market Outlook, April 11, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute..

Asian markets are poised for a third consecutive week of declines as initial relief turned to concern following the White House's announcement that US tariffs on China have increased to 145%. US Treasury bonds have continued their downward trend this week. The Dollar has continued to decline after experiencing its most significant drop in three years. Both stocks and bonds fell due to an escalating global trade dispute, which has further dampened an already weak risk appetite. In contrast, the Euro rose by up to 1.6%, the Yen strengthened, and gold reached an all-time high, reflecting investors' shift towards safe havens and alternatives outside the US. Currencies from emerging markets, such as the Korean Won and Thai Baht, also appreciated against the Dollar. A metric for emerging market currencies rose by nearly 0.6%, aiming for its highest trading day since August. The surge in the Yen pushed the Japanese currency to around 14 on Friday, a rate not seen since October. Meanwhile, the Swiss Franc reached its highest valuation in ten years.

The primary takeaway from this week’s volatility in US Treasury markets, driven by tariffs, is the perceived temporary loss of its safe haven status. Overnight, rising risk aversion put pressure on long-term Treasuries, partly due to anxiety ahead of the 30-year auction. Nevertheless, the $22 billion in supply was absorbed without significant fallout, if any. Analyzing market positioning, open interest indicators show that the sell-off was mainly due to longs being reduced, rather than a surge in new short positions. A decrease in open interest is reasonable given the prevailing uncertainty, especially concerning headline risks. This positioning shift connects to the accumulation of longs since the year began, resulting in a bullish tilt at the start of the quarter. There were already indications of bullish exhaustion a few weeks back, as few new longs emerged during market rallies. Even though some longs have been reversed recently, the positioning still appears overly bullish. Thus, there is an asymmetric risk to the downside for Treasuries, with additional longs likely to be cut.

The ONS reported that UK GDP grew by 0.5% in February, exceeding expectations of 0.1%. January's output was revised to flat, not a 0.1% decline. Even if March shows no growth, Q1 GDP will rise by 0.6%, surpassing the BoE's anticipated 0.25%. Despite broad-based sector expansion, this growth surprise is unlikely to impact policy decisions due to recent data volatility and increasing concerns about global trade implications.

Since the Liberation Day announcements on April 2, market conditions have shifted focus away from scheduled data and events, with political headlines driving the market. However, economic data remains important as it provides a macro baseline before the US trade news. In the UK, upcoming labor market data on Tuesday and inflation data on Wednesday may appear outdated, especially with the likelihood of Q1 pay growth undershooting the Bank of England's expectations. These expectations need updating to reflect the new reality in the May Monetary Policy Report. Similarly, even if the Consumer Price Index (CPI) remains around 2.7% year-on-year as expected by the BoE, the April figure is anticipated to rise due to factors like the reset of the energy price cap. The European Central Bank's decision on Thursday is set to be the highlight of the shortened week, offering insight into policymakers' responses to the trade shock. A 25 basis point cut is fully anticipated, though guidance may be unclear amid uncertainty. The US calendar is relatively light, but retail sales on Wednesday might reveal whether weakening survey signals are impacting tangible data. Additionally, the first glimpse of Q1 China GDP on Wednesday could sway sentiment, given China's exposure to tariffs.

Overnight Newswire Updates of Note

• ECB Seen Cutting Rate Twice In Policy Beholden To Trump’s Whims

• Fed’s Collins Says Tariff Price Boost Could Delay Rate Cuts

• Tariff Pause Does Not Change Fundamentals, Fed Sees Risks Ahead

• Trump: US "Getting Closer" To New Gaza Ceasefire And Hostage Deal

• Defense Sec Hegseth To Cut $5B In Contracts After DOGE Review

• Gold And Swiss Franc Surge As Investors Seek Haven Assets

• US Targets China Oil Storage Terminal In New Iran-related Sanctions

• China Speaks With Saudi Arabia, South Africa On Response To US Tariffs

• Shock Yuan Devaluation Calls Are Overblown, Top Forecaster Says

• Japan Will Discuss Forex If Bessent Brings It Up at Tariff Talks

• NZ Manufacturing PMI Eases To 53.2 On 3rd Month Of Expansion

          (Sourced from reliable financial news outlets)

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.1000-10 (4.4BLN), 1.1020-30 (678M), 1.1035-40 (892M)

• 1.1100 (267M), 1.1355 (273M)

• USD/JPY: 143.75 (200M), 144.00 (362M), 144.50 (290M)

• 145.00 (701M), 145.08-10 (360M), (145.30-40 (640M)

• EUR/JPY: 159.15 (408M), 164.00 (300M), 165.00 (200M)

• EUR/CHF: 0.9500 (412M), 0.9600 (200M). EUR/GBP: 0.8475 (210M)

• 0.8515 (200M), 0.8575 (201M)

• GBP/USD: 1.2850 (808M), 1.2900 (345M), 1.2915 (302M)

• AUD/USD: 0.6100 (1.24BLN), 0.6150-55 (1BLN), 0.6290-00 (1.05BLN)

• USD/CAD: 1.3935 (600M), 1.3975 (280M), 1.4000 (220M)

• 1.4045 (2.42BLN)

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 bullish

• Weekly VWAP bearish

• Seasonality suggests bullishness into late April

• Above 5500 target 5604

• Below 4951 target 4755

EURUSD Pivot 1.0750

• Daily VWAP bullish

• Weekly VWAP bullish 

• Seasonality suggests bearishness into the end of April

• Above 1.12 target 1.15

• Below 1.0690 target 1.0550

GBPUSD Pivot 1.28

• Daily VWAP bullish

• 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 bearish

• Seasonality suggests bearishness into early May

• Above 1.52 target 153.80

• Below 150.50 target 140

XAUUSD Pivot 2950

• Daily VWAP bullish

• Weekly VWAP bullish 

• Seasonality suggests bearishness into mid/late April

• Above 2900 target 3280

• Below 2880 target 2835

BTCUSD Pivot 90k

• Daily VWAP bearish

• Weekly VWAP bearish 

• Seasonality suggests bullishness into mid April

• Above 97k target 105k

• Below 95k target 65k