Daily Analysis 18/07/2025

• GBP/USD Price: GBP/USD remains under pressure during Thursday's European session, trading near its lowest point since May 20, as renewed US Dollar demand weighs on the British Pound and risk sentiment weakens.
• UK Labor Market: The UK Claimant Count Change rose by 25.9K in June, well above the expected 17.9K, signaling further labor market deterioration. This increases the strain on the UK economy and complicates monetary policy decisions for the Bank of England.
• Citi Prediction: Citi now expects the Bank of England to hold rates in September instead of cutting, with gradual rate reductions projected between November and March. The shift reflects continued inflation pressures and cautious policymaking in a weakening economic environment.
• US Job Market: US initial jobless claims came in at 221K, beating forecasts. The low layoffs and modest hiring suggest a resilient labor market, bolstering expectations that the Fed will maintain a patient stance on easing.
• Fed’s Williams: Fed’s Williams reaffirmed a data-driven approach, acknowledging continued inflation progress but citing tariff-related risks and uncertainty. His stance reflects the Fed’s intent to wait for more clarity before shifting policy.

Closing statement: GBP/USD remains under bearish pressure as weak UK labor data and cautious BOE guidance contrast with ongoing US economic resilience. The pair could face further downside in the near term unless UK fundamentals show improvement or US inflation data surprises to the downside.

• XAU/USD Price: Gold prices pull back from recent multi-week highs above $3,370, settling near $3,330 in Friday trading. The retreat is driven by strong US economic data, reducing safe-haven appeal and boosting risk sentiment.
• US Retail Sales: June US retail sales rose by 0.6%, surpassing the 0.1% forecast. Despite a downward revision to May, robust growth in e-commerce, autos, building materials, and clothing signals resilient consumer demand, pressuring gold.
• Fed’s Kugler: Fed Governor Kugler supported keeping rates steady amid low unemployment and inflationary risks tied to new tariffs, reinforcing expectations that rate cuts remain off the table in the short term, limiting gold’s upside.
• Beige Book: The latest Fed Beige Book noted stable business activity and subdued inflation, but also flagged rising input costs. This nuanced tone supports the Fed’s wait-and-see stance, slightly tempering demand for non-yielding assets like gold.
• China–US Trade: China’s Commerce Minister highlighted stabilized commercial ties with the US under the Geneva and London frameworks, helping to cool down trade tensions and improving risk appetite, which typically dampens gold demand.

Closing statement: XAU/USD is under moderate pressure as strong US data and a steady Fed reduce urgency for safe-haven buying. While global uncertainty remains, the current macroeconomic tone favors a consolidation or mild downside in gold prices short-term.

• Crude Oil Price: West Texas Intermediate (WTI) trades around $66.50 in early Friday trading, maintaining recent gains. The price stability reflects easing global tensions and a more optimistic market outlook for energy demand.
• China’s Growth: China's Q2 GDP slowed less than expected, partly due to pre-tariff stockpiling, which reduced immediate concerns over demand. Notably, June crude throughput jumped 8.5% YoY, reinforcing confidence in China’s crude consumption outlook.
• Geopolitical Pressure: China is threatening to block a $23 billion Panama Canal ports deal unless its state-owned shipping firm Cosco receives a stake, injecting geopolitical tension into global trade routes—potentially impacting crude shipping dynamics.
• Chinese Consumption: China’s Minister of Commerce forecasts retail sales to exceed ¥50 trillion by 2025, with a 5.5% annual growth pace. This underscores the resilience of domestic demand, which indirectly supports energy consumption.
• US-China Trade: Trump’s lifting of AI chip bans and a new trade deal with Indonesia suggest thawing trade tensions, boosting market confidence and adding upside pressure to oil prices through anticipated demand recovery.

Closing statement: Crude oil prices remain supported as China’s economic resilience, firm demand indicators, and improved US-China trade dynamics outweigh geopolitical risks. WTI could trend higher if global demand continues to stabilize and trade relations remain constructive.

• DAX Price: The DAX index jumped 1.51% on Thursday, closing at 24,371 and recovering from a 0.21% dip the previous day. While the rebound was significant, the index still remains below its July record high of 24,639, suggesting room for further upside.
• EU–US Trade: A 20-year LNG supply agreement between Italy’s ENI and US-based Venture Global raised hopes for a broader EU–US trade deal. The pact aligns with US efforts to narrow the transatlantic trade deficit, particularly in energy exports.
• Producer Prices: Germany’s June PPI rose 0.1% m/m, slightly above expectations. However, the -1.3% annual decline is largely driven by lower energy prices, signaling subdued cost pressures despite monthly improvements.
• US Import Prices: June US import prices edged up 0.1%, missing the 0.3% forecast. A softer import cost environment in the US may ease inflationary concerns globally and reduce pressure on central banks, potentially benefiting equities like the DAX.
• Michigan Sentiment: Markets await the July Michigan Consumer Confidence Index, forecast to rise to 61.5 from 60.7. A stronger reading could influence Fed rate expectations, indirectly impacting risk appetite in European equity markets.

Closing statement: The DAX posted a healthy recovery backed by trade optimism and stable economic data. Energy-sector developments and softening US inflation inputs offer tailwinds, while attention now turns to US consumer sentiment for directional cues.