Weekly Trading Newsletter

By Samuel Leach

Welcome to This Week's Market Outlook

As we close out June 2025 and head into the second half of the year, I find myself both excited and cautious about the opportunities ahead. The markets have delivered a remarkable performance to end the month, with both the S&P 500 and Nasdaq hitting fresh all-time highs. Yet, as any seasoned trader knows, when everyone is celebrating, that's precisely when we need to be most vigilant.

This week brings us face-to-face with some of the most significant market-moving events we've seen all year. The looming July 9th tariff deadline, a crucial jobs report, and the continued speculation around Federal Reserve policy all converge to create what I believe will be a defining period for the markets. Let me walk you through what I'm seeing, where the opportunities lie, and most importantly, how I'm positioning myself for the weeks ahead.

US Markets: Riding the Wave to New Heights

The American equity markets have delivered exactly what I've been anticipating over the past several weeks. The S&P 500 closed Friday at 6,173.07, marking not just a new all-time high, but a decisive break above the resistance levels that had been capping gains since February. The index posted an impressive 3.5% gain for the week, while the Nasdaq Composite surged even higher with a 4.1% weekly advance to 20,273.46.

What strikes me most about this rally is its breadth and conviction. This isn't the narrow, tech-driven advance we've seen in previous cycles. The Dow Jones Industrial Average, often the laggard in bull markets, gained 3.8% for the week, demonstrating that the rally has legs across multiple sectors and market capitalisations. When I see this kind of broad-based strength, it tells me that institutional money is flowing into equities with absolute conviction.

The technical picture is clear from my perspective. We've broken above key resistance levels on strong volume, and the momentum indicators I rely on are all pointing in the same direction. The 50-day moving average has crossed decisively above the 200-day, creating what technical analysts call a "golden cross" – a pattern that historically has preceded extended bull market runs.

But here's what really catches my attention: the VIX, our fear gauge, closed at just 18.72, down 1.63% for the week. This level of complacency in the options market is a double-edged sword. On one hand, it confirms that investors are comfortable taking risks, which supports higher equity prices. On the other hand, when fear is this low, it often means the market is ripe for a surprise that could trigger a sharp correction.

I've been in this business long enough to know that markets don't move in straight lines forever. The combination of all-time highs and ultra-low volatility creates what I call a "powder keg" environment. One unexpected headline, one disappointing economic data point, or one geopolitical flare-up could trigger a rapid unwinding of positions. This is why, despite my overall bullish outlook, I'm keeping my position sizes measured and maintaining tight risk management protocols.

The Federal Reserve's policy trajectory remains the key driver behind this equity strength. Markets are now pricing in an 18.6% chance of a rate cut at the July meeting, up from just 14.5% a week ago. More significantly, the probability of a cut by September has surged to 93%, up from 70% just seven days prior. This shift in expectations is providing the liquidity backdrop that equity markets need to continue their advance.

Federal Reserve Governor Michelle Bowman's recent comments have been particularly noteworthy. Her observation that the labour market "appears to be less dynamic" and her suggestion that the Fed should "put more weight on downside risks to our employment mandate" signal a clear shift in the central bank's thinking. When Fed officials start talking about employment risks rather than inflation risks, it's typically a precursor to easier monetary policy.

However, I'm not entirely convinced that the Fed will move as aggressively as markets are pricing in. Chair Powell's testimony last week struck a more cautious tone, emphasising that the Fed is "well-positioned to wait." This disconnect between market expectations and Fed communications creates a potential catalyst for volatility that I'm watching closely.

For the week ahead, I'm particularly focused on the June employment report, which will be released Friday. This data will be crucial in determining whether the Fed's dovish pivot is justified or whether the labour market remains too robust to warrant immediate rate cuts. Any surprise strength in job creation or wage growth could quickly reverse the recent rally in rate-sensitive sectors.

UK Markets & Sterling: A Story of Resilient Outperformance

The UK market story remains one of the most compelling narratives in global equities, and frankly, one that many international investors are still overlooking. The FTSE 100 has delivered a remarkable 20% return over the past twelve months, significantly outpacing the US market's 12% gain and the broader world ex-US index's 16% advance. This outperformance isn't accidental – it reflects fundamental improvements in the UK economic outlook that I've been highlighting for months.

At 8,799 points, the FTSE 100 is trading near multi-year highs, supported by a combination of attractive valuations, improving economic fundamentals, and what I believe is a structural shift in global capital allocation toward UK assets. The index's 0.72% gain on Friday capped off another solid week, though I note that energy stocks acted as a drag on performance, with BP falling 6% and Shell showing weakness as oil prices retreated from their recent highs.

What's particularly encouraging is the strength we're seeing in the FTSE 250, which has been outperforming its large-cap counterpart. This mid-cap index is often considered a more accurate barometer of the UK's domestic economic health, and its recent strength suggests that confidence in the UK recovery story is broadening beyond just the international companies that dominate the FTSE 100.

The political landscape has also been more supportive than many anticipated. While Prime Minister Starmer faces challenges as he marks his first year in office, the government's recent backing down on disability benefit cuts following a parliamentary rebellion demonstrates a pragmatic approach to policy-making. The ongoing House of Lords reform discussions and the government's focus on devolution and skills investment are creating a more business-friendly environment than many had expected.

But it's the currency story that really has my attention. Sterling's performance against the dollar has been nothing short of spectacular, with GBP/USD reaching 1.3721 – levels we haven't seen in nearly four years. The pound has gained 1.81% against the dollar over the past month alone, and I believe we're only in the early stages of this move.

The fundamental drivers behind sterling's strength are compelling and, in my view, sustainable. The UK economy is showing signs of resilience that contrast sharply with the softening we're seeing in other major economies. While the US Federal Reserve is pivoting toward rate cuts due to concerns about labour market weakness, the Bank of England is maintaining a more hawkish stance, creating a favourable interest rate differential for the pound.

From a technical perspective, GBP/USD has broken through several key resistance levels that had been capping gains for years. The move above 1.37 was particularly significant, as this level had acted as a ceiling during multiple previous attempts. With momentum indicators showing continued strength and positioning data suggesting that speculative accounts remain underweight in sterling, I see further upside potential.

My year-end target for GBP/USD remains 1.38, but I'm increasingly confident that we could see the pair test 1.40 if the current fundamental backdrop persists. The key will be maintaining the UK's relative economic outperformance while the US continues to show signs of softening.

However, I'm not blind to the risks. Brexit-related uncertainties, while diminished, haven't completely disappeared. The recent immigration rule changes published by the Home Office represent significant policy shifts that could impact economic growth. Additionally, the UK's exposure to European trade means that any escalation in US-EU trade tensions could weigh on sterling and UK assets.

For traders looking to capitalise on this theme, I continue to favour long GBP/USD positions on any dips toward the 1.36 level, which should now act as support. I'm also watching GBP/EUR closely, as the pound's strength against the euro could provide additional opportunities if European economic data continues to disappoint.

Commodities: Oil's Reality Check and Gold's Crossroads

The commodity markets have delivered some of the most dramatic moves of the past week, revealing key insights into global risk appetite, geopolitical tensions, and monetary policy expectations. Let me break down what I'm seeing in the two markets that matter most to my trading strategy: oil and gold.

Oil: The Geopolitical Premium Evaporates

The oil market's behaviour over the past week has been a masterclass in how quickly sentiment can shift in commodity markets. WTI crude closed at $65.52, while Brent settled at $67.77, representing a dramatic reversal from the elevated levels we saw during the height of Middle East tensions. What we've witnessed is the complete unwinding of the geopolitical risk premium that had been supporting prices.

This decline is particularly significant because it demonstrates how much of oil's recent strength was driven by fear rather than fundamental supply and demand dynamics. When Iran-Israel tensions escalated, traders rushed to price in potential supply disruptions, pushing oil well above what the underlying market conditions justified. Now that those tensions have eased, we're seeing prices settle back into a range that better reflects the actual balance between supply and demand.

From my perspective, oil is now trading in what I consider a fair value range of $65-70 per barrel. This level reflects several key factors: OPEC+ production discipline remains intact, but it's not as tight as it was during previous cycles; US shale production continues to grow, but at a more measured pace; and global demand, while steady, isn't showing the explosive growth we've seen in previous economic cycles.

The technical picture in oil suggests we're entering a consolidation phase. The rapid decline from recent highs has brought us to a level where value buyers are likely to emerge, but the momentum clearly favours the downside in the near term. I'm watching the $64 level in WTI closely, as a break below this could trigger another leg lower toward $60.

For trading purposes, I'm treating oil as a range-bound market for now. The $65-70 range in WTI provides clear parameters for a mean-reversion strategy: buying weakness near the lower bound and selling strength near the upper bound. However, I'm keeping position sizes modest given the potential for headline-driven volatility.

Gold: Caught Between Fed Dovishness and Dollar Strength

Gold presents a more complex picture, and frankly, it's one of the more challenging markets to read right now. At $3,286.10, gold is down 1.85% for the week, which on the surface seems counterintuitive given the increased expectations for Federal Reserve rate cuts.

Traditionally, gold thrives in an environment of falling real interest rates, and with the Fed potentially pivoting toward easier policy, we should be seeing strength in the precious metal. The fact that we're not suggests that other factors are at play, and I believe the primary culprit is the continued strength in risk assets.

When equity markets are hitting all-time highs and credit spreads are tight, gold's role as a safe-haven asset becomes less relevant. Investors are willing to take risks in pursuit of higher returns, and gold's lack of yield makes it less attractive in this environment. Additionally, the dollar's resilience against most currencies (except sterling) has created headwinds for dollar-denominated commodities.

However, I don't think this weakness in gold will persist indefinitely. The fundamental case for gold remains intact: central banks continue to be net buyers, inflation expectations remain elevated despite recent declines, and geopolitical risks haven't disappeared – they've moved to the background temporarily.

From a technical standpoint, gold is testing essential support levels around $3,250-3,280. A break below this zone could trigger additional selling toward $3,200, but I view any such decline as a buying opportunity rather than the start of a significant bear market.

My strategy in gold is to wait for clearer signals. If we see a decisive break below $3,250, I'll look for signs of capitulation selling that could mark a short-term bottom. Conversely, if gold can hold current levels and begin to consolidate, I'll be looking for opportunities to establish long positions ahead of what I believe will be the next leg higher.

The key catalyst for gold will likely come from the Federal Reserve policy. If the central bank does begin cutting rates in September as markets expect, gold should benefit from lower real yields. However, if economic data remains resilient and the Fed maintains its current stance, gold could face additional pressure in the near term.

The July 9th Tariff Deadline: The Elephant in the Room

If there's one event that could completely reshape the market narrative over the next two weeks, it's the approaching July 9th deadline for President Trump's tariff negotiations. This isn't just another political headline that traders can ignore – it's a potential catalyst that could trigger significant volatility across multiple asset classes.

Let me be clear about what's at stake here. President Trump has threatened to impose tariffs as high as 50% on European Union exports, including cars and steel, if satisfactory trade deals aren't reached by July 9th. These aren't empty threats – they're part of a broader trade strategy that has already seen the administration terminate trade talks with Canada over disputes regarding digital taxation policies.

What makes this situation particularly concerning from a market perspective is Trump's recent statement that he doesn't expect to extend the July 9th deadline. In a recent interview, he explicitly said he doesn't think he'll need to extend the 90-day pause on tariffs, suggesting that he's prepared to follow through on his threats if negotiations don't progress to his satisfaction.

The market's current complacency regarding this issue, in my view, represents a significant mispricing of risk. While the White House has suggested that the July deadlines are "not critical," Trump's own statements contradict this assessment. The disconnect between official messaging and the President's direct communications creates uncertainty that markets hate.

From a trading perspective, this creates both risks and opportunities. The most obvious risk is a broad-based sell-off in risk assets if tariffs are implemented as threatened. A 50% tariff on European exports would likely trigger retaliatory measures, potentially sparking a trade war that could derail the global economic recovery.

However, there's also the possibility that last-minute deals are reached, which could trigger a relief rally. This binary outcome – either significant tariffs or successful negotiations – creates the kind of event risk that can lead to substantial price movements in a short period.

I'm particularly concerned about the impact on European assets. The euro has already shown signs of weakness against both the dollar and sterling, and the implementation of significant tariffs could accelerate this decline. European equity markets, which have been underperforming their US counterparts, could face additional pressure if trade tensions escalate.

The currency implications are also significant. A trade war would likely strengthen the dollar as investors seek safe-haven assets, but it could also complicate Federal Reserve policy. If tariffs lead to higher inflation, it could delay or prevent the rate cuts that markets are currently pricing in.

For the week ahead, I'm reducing my overall risk exposure and maintaining higher cash levels than usual. While I remain constructive on the medium-term outlook for risk assets, the binary nature of the tariff decision makes it prudent to be defensive in the near term.

I'm also watching the VIX closely. At current levels around 16, the options market is pricing in minimal volatility risk. If tariff concerns begin to weigh on sentiment, we could see a rapid spike in volatility, creating opportunities for those positioned appropriately.

My base case remains that some form of deal will be reached, even if it's a temporary extension of negotiations. The economic costs of a full-scale trade war are too high for all parties involved. However, the risk of miscalculation or political posturing leading to an unintended escalation is real, and traders need to be prepared for this possibility.

Economic Data: The Jobs Report Takes Center Stage

The economic calendar for the week ahead is dominated by one key release: the June employment report, scheduled for release on Friday. This data will be crucial not just for understanding the current state of the US labour market, but for determining whether the Federal Reserve's increasingly dovish stance is justified.

Current expectations forecast the US economy to have added approximately 106,000 jobs in June, with the unemployment rate potentially rising to 4.3%. These numbers, if realised, would represent a continued cooling in the labour market that would support the Fed's case for rate cuts. However, any significant deviation from these expectations could trigger substantial market volatility.

What I'm watching most closely isn't just the headline payroll number, but the underlying details that will give us insight into labour market dynamics. Average hourly earnings growth is expected to be significant, as wage pressures remain a key concern for Federal Reserve officials concerned about persistent inflation.

The broader context for this job report is crucial. We've seen a series of economic indicators suggesting that the US economy is losing momentum. Retail sales have been weaker than expected, manufacturing activity remains subdued, and consumer confidence has shown signs of softening. A weak jobs report would confirm this narrative and likely accelerate expectations for Fed rate cuts.

Conversely, a surprisingly strong employment report could prompt markets to reassess their expectations for aggressive rate cuts. If job creation exceeds expectations and wage growth accelerates, it could delay Fed easing and trigger a reversal in some of the recent gains in rate-sensitive sectors.

Beyond the jobs report, we'll also receive updates on job openings, manufacturing and services PMI data, and initial jobless claims. These secondary indicators will provide additional context for the labour market's trajectory and help traders gauge whether the June employment report represents a trend or an anomaly.

It's worth noting that markets will be operating on a shortened schedule this week, with early closures on Thursday and markets closed on Friday for the July 4th holiday. This compressed trading schedule could amplify volatility, as there will be less time for markets to digest and react to the employment data.

My Trading Strategy: Navigating Uncertainty with Discipline

Given the confluence of risks and opportunities I've outlined, my trading approach for the week ahead emphasises flexibility, risk management, and patience. Here's how I'm positioning myself and what I'm watching for.

Equity Markets: Despite the all-time highs, I remain constructively positioned in US equities, but with reduced size and tight risk management. The technical momentum remains strong, and the fundamental backdrop of potential Fed easing continues to support higher prices. However, I'm keeping stops closer than usual given the binary risks around tariffs and the potential for volatility around the jobs report.

I'm particularly focused on sectors that would benefit from Fed easing: real estate investment trusts (REITs), utilities, and dividend-paying stocks. These sectors have lagged during the recent rally but could outperform if economic data confirm rate cut expectations.

Currency Markets: Sterling remains my highest conviction trade. The fundamental case for GBP/USD strength remains intact, and I view any dips toward 1.36 as opportunities to buy. I'm targeting 1.38 by year-end, with the potential for further gains if the UK's economic outperformance continues.

Commodities: My approach to commodities remains tactical rather than strategic. In oil, I'm treating the $65-70 range as a trading range, looking to buy weakness and sell strength. Gold requires more patience – I want to see how it reacts to the key support levels around $3,250 before committing significant capital.

Risk Management: Perhaps most importantly, I'm maintaining higher cash levels than usual and keeping position sizes smaller across all markets. The combination of all-time highs in equities, ultra-low volatility, and significant binary risks creates an environment where preservation of capital is paramount.

I'm also using options strategically to hedge downside risk. Long VIX calls provide portfolio insurance at relatively low cost given current volatility levels. Additionally, I'm using put spreads in the major equity indices to limit downside exposure while maintaining upside participation.

Key Levels to Watch

S&P 500: Support at 6,100, resistance at 6,200. A break below 6,100 could trigger a deeper correction toward 6,000.

GBP/USD: Support at 1.3600, resistance at 1.3800. The 1.36 level is crucial for maintaining the bullish trend.

WTI Oil: Trading range between $65-70. Breaks outside this range could signal the next directional move.

Gold: Key support at $3,250. A break below could target $3,200, while a hold could set up a bounce toward $3,350.

VIX: Currently at 18.32. A move above 20 would signal increased market stress and potential opportunities in volatility trades.

Final Thoughts: Opportunity Meets Uncertainty

As we head into the second half of 2025, I find myself both optimistic about the medium-term outlook and cautious about the near-term risks. The combination of strong market momentum, supportive monetary policy expectations, and improving economic fundamentals in key regions like the UK creates a backdrop that should favour risk assets over time.

However, the next two weeks will likely be defining for the market's trajectory through the summer months. The July 9th tariff deadline represents the kind of binary risk event that can quickly change market dynamics, while the June jobs report will provide crucial insight into whether economic fundamentals justify the Federal Reserve's dovish pivot.

What gives me confidence in navigating this environment is the discipline I've developed over years of trading through various market cycles. When uncertainty is high, the temptation is often to become either paralysed by indecision or to take excessive risks in pursuit of outsized returns. Neither approach serves traders well in the long run.

Instead, I'm focusing on what I can control: position sizing, risk management, and maintaining the flexibility to adapt as new information becomes available. The markets will do what they do – our job as traders is to position ourselves to benefit from their movements while protecting our capital when we're wrong.

The opportunities are there for those willing to do the work and maintain discipline. Sterling's strength story is far from over, and I believe we're still in the early stages of what could be a multi-month trend. The US equity market's technical strength, supported by potential Fed easing, suggests that any pullbacks should be viewed as buying opportunities rather than the start of a major correction.

At the same time, the risks are real and shouldn't be ignored. Geopolitical tensions, while currently subdued, haven't disappeared. Trade policy uncertainty could resurface quickly if negotiations fail. And the combination of all-time highs and ultra-low volatility creates conditions where surprises can have outsized impacts.

Week Ahead Checklist

As we move into this critical week, here are the key items on my watchlist:

Monday, July 1st: Watch for any weekend developments on trade negotiations. Monitor Asian market reaction to Friday's US close.

Tuesday, July 2nd: Job openings data (JOLTS) will provide insight into labour market dynamics ahead of Friday's employment report.

Wednesday, July 3rd: Manufacturing and services PMI data will help gauge economic momentum. Watch for any tariff-related headlines as we approach the July 9th deadline.

Thursday, July 4th: Markets close early at 1 PM ET. Limited trading activity expected, but any major news could have amplified impact due to thin liquidity.

Friday, July 5th: Markets closed for Independence Day holiday. June employment report released at 8:30 AM ET will set the tone for next week's trading.

The path forward requires patience, discipline, and respect for both the opportunities and risks that lie ahead. I remain confident in my ability to navigate these markets successfully, but I also recognise that humility and adaptability are essential traits for long-term trading success.

Stay disciplined, manage your risk, and remember that the best trades often come when others are paralysed by uncertainty. The next two weeks will provide plenty of opportunities for those prepared to act when the time is right.

Samuel Leach
Founder of Samuel and Co Trading

This newsletter is for educational purposes only and does not constitute investment advice. Trading involves substantial risk and may not be suitable for all investors. Past performance is not indicative of future results.