Markets Weekly Outlook - US Data Dump, Earnings Season and Trade Deals

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Week in review: Trade Deals Materialize

The August 1 tariff deadline approaches and with it we have had a few trade deal announcements which came out this week. Market sentiment seemed to get a boost, with Gold in particular feeling the heat of a stronger US Dollar.

Market participants remain at least partially on the edge of their seats as we have not seen any details of agreements as yet. This led to early signs of cracks in potential trade deals with the US announcing a Japan trade deal which included significant investments in the US.

However, Japanese officials and US officials seem to have differing views of the deal with Japanese officials stating that the US will secure only 90 per cent of profits from joint investments with Japan if it takes on a proportional amount of risk and financing. This seems to suggest that cracks may be present in the two allies’ interpretation of their hastily agreed trade deal.

Japanese officials further stressed there was no written agreement with Washington & no legally binding one would be drawn up after Trump administration officials claimed Tokyo would back investments in the US from which American taxpayers would reap nine-tenths of the profits.

Wall Street and the dollar strengthened on Friday as investors prepared for the upcoming week. All three major indexes were slightly up in early trading and set to end the week with gains.

The week also saw global investors snap up a net $8.71 billion worth of equity funds during the week, reversing a $4.4 billion net withdrawal in the prior week, data from LSEG Lipper showed.

Source: LSEG

With just a week left before Trump's trade deadline, the US and its partners are rushing to finalize deals. European negotiators are optimistic after the trade agreement with Japan earlier this week.

The dollar strengthened but is still set for its biggest monthly drop as investors focus on upcoming trade talks and central bank meetings.

The dollar index rose 0.28% to 97.72, while the euro fell 0.2% to $1.173. Against the yen, the dollar gained 0.4%, reaching 147.57.

In cryptocurrencies, bitcoin dropped 3.08% to $115,133.22, and Ethereum fell 2.63% to $3,641.43.

Oil prices dipped as investors considered global demand and a possible supply increase from Venezuela. US crude fell 0.56% to $65.63 per barrel, and Brent dropped 0.39% to $68.91.

Gold prices also declined as the stronger dollar and optimism over US-EU trade talks reduced demand for the safe-haven metal. Spot gold fell 0.93% to $3,336.52 an ounce.

Earnings Season

Over a third of S&P 500 companies have reported earnings, with 80% beating expectations, according to LSEG data.

Analysts now predict second-quarter earnings will grow 7.7% compared to the 5.8% estimate from July 1.

Next week, four big tech companies Amazon, Apple, Meta, and Microsoft will release their earnings. Investors will closely watch their updates to see if spending on AI is delivering results and if trade tariffs are still affecting their future plans.

The Week Ahead: US Very Much in Focus, Fed Decision, Trade Deals and Earnings

The week ahead has several important data releases lined up. The US and UK will release inflation data with key GDP data from China and manufacturing data from Japan.

Asia Pacific Markets - US/China Trade Talks

The key focus this week is the US-China trade talks in Sweden. A 90-day tariff ceasefire, which started in May, is set to end on August 12. Markets are watching closely to see if the ceasefire will be extended or if there will be changes to current tariffs. An agreement is expected, but uncertainty remains despite President Trump's claims that a framework is in place.

On the data front, China's official July PMI (out Thursday) is expected to stay in contraction at 49.6. The S&P PMI (focused on private and export-driven firms) will follow on Friday. Over the weekend, June industrial profits data will be released. After a sharp drop in May, markets are eager to see if profits recover due to eased trade tensions or if the decline continues.

The Bank of Japan (BoJ) is not expected to make any changes at its meeting on July 30-31. However, markets will pay attention to the BoJ's updated economic outlook. The recent US-Japan trade deal has reduced uncertainty, which may ease pressure on the BoJ. If inflation forecasts are raised, it could give clues about future interest rates. On the downside, weak industrial production data for June may hurt growth, but this could be balanced by a rebound in retail sales.

Economic Data from Europe, UK and the US

The US will be a key focus next week thanks to a data dump and of course trade deal announcements.

On Wednesday, we will get 2nd quarter GDP data which I expect to grow 3.3% (above the 2.5% forecast), driven by strong trade and investment. However, consumer spending, a key growth driver, has slowed since late 2024 due to tariff concerns and economic uncertainty.

This will be followed by the Fed rate decision later in the day. We obviously have the ongoing attacks at Fed Chair Jerome Powell by US President Trump and his administration. However, this is unlikely to sway the Fed at this stage as they are likely to adopt a wait and see approach. The economy is slowing but stable. The Fed is unlikely to cut rates now though I could see a 50bp cut in December if inflation eases.

The US data week will end with focus on Jobs data and PCE.

The Fed's preferred inflation measure, the core PCE deflator, is expected to rise 0.3% in June, slightly higher than CPI's 0.2%. NFP data on Friday is expected at 100-120k, with unemployment ticking up to 4.2%.

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As Europe heads into summer, key eurozone data is due. GDP is expected to slow after a strong 1Q boosted by U.S. trade activity. April saw drops in production and exports, though May had a rebound, especially in pharmaceuticals. Overall, U.S. developments likely hurt eurozone GDP, and weak service sector performance may add to the slowdown.

On Friday we will get Euro Area inflation data. ECB President Lagarde has highlighted stable inflation and steady growth as positives. July's inflation data is expected to stay calm, but the focus will be on the U.S.-EU trade relationship as the August 1 deadline nears.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the Week - Gold (XAU/USD)

This week's Chart of the week is Gold (XAU/USD).

Gold has shrugged off its early week gains and dropped over a $100 from the weekly highs around the $3440/oz mark.

Looking at the chart below and we have the triangle pattern which appeared to experience a upside breakout earlier in the week before reversing now to test the lower band of the triangle pattern.

Gold has been mixed since making fresh all-time highs in April of $3500/oz with higher highs followed by lower lows. However, the failure this week to take out the most recent swing high at $3451/oz on June 16 may warrant caution for bulls.

A break below the lower end of the triangle pattern would usually be a sign of further downside, however following the false breakout this week, market participants may rightly be slight confused.

If the trendline holds, bulls may return, however if it does give way then the door may be opening for a larger retracement and the $3300 level is the next key spot of support i will pay attention to.

Gold (XAU/USD) Daily Chart - July 25, 2025

Source:TradingView.Com (click to enlarge)

Key Levels to Consider:

Support

• 3300
• 3278
• 3251 (100-day MA)

Resistance

• 3350
• 3400
• 3425

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

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