Daily Market Outlook, September 17, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Asian stocks fluctuated between minor gains and losses as investors awaited the Federal Reserve’s policy announcement, speculating that the central bank might lower interest rates for the first time this year. The MSCI Asia Pacific Index rebounded from earlier declines to increase by 0.1%. Chinese tech stocks in Hong Kong rose to their highest point in four years, driven by heightened enthusiasm for artificial intelligence. Gold remained steady after surpassing the $3,700-an-ounce mark for the first time, supported by a weakened dollar. The dollar index showed little movement after a two-day decline, bringing it back to levels not seen since March 2022. In Japan, a 20-year government bond auction attracted the strongest interest since 2020, thanks to rising yields. The bond sale marked the first evaluation of demand for new super-long bonds following Prime Minister Shigeru Ishiba's resignation announcement, opening the door for successors who may advocate more aggressive fiscal policies. Investors are closely monitoring the Fed meeting for hints about interest rate movements that will influence the economic outlook in the coming months. Some bond traders have increased their bets on options that predict the central bank will implement at least one half-point reduction in the remaining three policy meetings of the year. Additionally, money markets are fully anticipating a quarter-point reduction from the Fed, along with a series of cuts expected over the next year. Such forecasts would be a positive development for stock investors, who have largely relied on a gradual easing strategy to prevent the economy from entering a recession.
The Fed faces numerous considerations, particularly with the recent personnel change — the Senate's confirmation of Trump ally Steven Miran to the board. Weak labor data is likely to anchor the dovish faction, as its deterioration raises mandated risks. This shift could move the discussion beyond tariff-related pass-through effects and their influence on inflation persistence and expectations. Emerging employment risks suggest that inflation concerns may be manageable, potentially paving the way for the Fed to lower its currently “modestly restrictive” policy rates. In fact, this perception might even allow the Fed to deliver more than the 25 basis points cut currently anticipated by the market. Front-loading a rate cut would not be unreasonable if the committee believes the labor market is in worse shape than the data implies, especially since payroll numbers often lag at cycle turning points. While the market does not view this as the base case — given prior inflation concerns and assumptions that the Fed would resist aggressive easing under White House pressure — there is precedent. Last September, the Fed delivered a 50 basis points cut after labor data raised alarms. Moreover, the tariff impact on PCE inflation has been relatively muted thus far, with most costs absorbed in profit margins. This slower pass-through might, however, exacerbate downside risks to employment and further dampen non-AI-related investment. In such a scenario, inflation uncertainties could manifest in greater dispersion among the FOMC’s dot plot projections. The committee must weigh these risks carefully as it navigates its policy decisions.
Overnight Headlines
Weak Jobs Data Sharpens Case For Resumption Of Fed Easing
Treasury Yields Fall Ahead Of Expected Fed Cut, Economic Projections
Bond Traders Boost Bets On Half-Point Fed Rate Cuts By Year-End
Dollar Nears A Three-Year Low Ahead Of FOMC’s Rate Decision
BoC Set To Pivot As Trade Tensions, Labour Market Strains Mount
Microsoft Will Invest $30B In AI Infrastructure, Operations Across UK
Drugmakers Have Pledged To Invest $350B In US After Tariff Threat
US Investors, Trump Close In On TikTok Deal With China
Tesla Settles Another Fatal Crash Lawsuit Ahead Of Jury Trial
GPIF In First Bets On Its Own For Japan Property, Infrastructure
BHP To Shutter Australia Coal Mine Due To High State Royalties
China Trials Its First Advanced Tools For AI Chipmaking
Ben & Jerry’s Co-founder Quits Over Unilever ‘Silencing’ Of Social Mission
Tether Outlines Plan To Conquer US Market With New Stablecoin
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1800 (533M), 1.1850 (1.6BLN), 1.1900 (1.4BLN)
EUR/CHF:0.9275 (360M), 0.9325 (360M), 0.9375 (601M), 0.9425 (425M)
EUR/GBP: 0.8700 (722M), 0.8725 (242M). GBP/USD: 1.3650 (471M)
AUD/USD: 0.6650 (462M). NZD/USD: 0.5900 (1BLN)
USD/JPY: 145.70 (1.4BLN), 146.00 (451M), 146.25 (225M)
146.85 (947M), 147.00 (327M), 148.00 (666M)
EUR/JPY: 173.25 (465M)
CFTC Positions as of the Week Ending 12/9/25
Speculators have raised their net short position in CBOT US Treasury bonds futures by 21,340 contracts, bringing the total to 98,608. They have also increased their net short position in CBOT US Ultrabond Treasury futures by 2,262 contracts, resulting in a total of 265,481. On the other hand, there has been a reduction in the net short position for CBOT US 10-year Treasury futures by 10,386 contracts, now totaling 857,972. Similarly, speculators have cut their net short position in CBOT US 5-year Treasury futures by 127,224 contracts, bringing it down to 2,554,763. Conversely, there is an increase in the net short position for CBOT US 2-year Treasury futures by 78,878 contracts, now totaling 1,374,961.
In the equity market, fund managers have lifted their S&P 500 CME net long position by 31,521 contracts to a total of 882,560, while equity fund speculators have raised their S&P 500 CME net short position by 43,737 contracts, reaching 419,631.
The Japanese yen net long position stands at 91,643 contracts, with the euro's net long position at 125,677 contracts. The British pound has a net short position of -33,605 contracts, while the Swiss franc shows a net short position of -28,839 contracts. Lastly, Bitcoin has a net short position of -468 contracts.
Technical & Trade Views
SP500
Daily VWAP Bullish
Weekly VWAP Bullish
Above 6440 Target 6666
Below 6420 Target 6370
EURUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Below 1.1750 Target 1.15
Above 1.18 Target 1.1910
GBPUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Below 1.36 Target 1.30
Above 1.3650 Target 1.3850
USDJPY
Daily VWAP Bearish
Weekly VWAP Bullish
Below 1.49 Target 1.45
Above 1.51 Target 1.54
XAUUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 3500 Target 3700
Below 3400 Target 3300
BTCUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 110k Target 118k
Below 109k Target 105k
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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!