IC Markets – Europe Fundamental Forecast | 11 November 2025

IC Markets – Europe Fundamental Forecast | 11 November 2025

What happened in the Asia session?
The Asia session was dominated by risk-on market tone, thanks to hopes of a US government shutdown resolution and strong gains in US equities overnight.​Macroeconomic data from New Zealand and the UK produced mild currency moves, with no surprises from NZD inflation and a modestly negative outcome for GBP.​​ Gold surged on lingering risk-hedging needs, while Asian equity benchmarks broadly advanced.​The JPY was the session’s biggest FX mover, weakening as traders shifted toward riskier assets.

What does it mean for the Europe & US sessions?
Global markets are experiencing a relief rally as progress toward ending the U.S. government shutdown removes a major source of uncertainty, with equities, gold, and risk assets all gaining. Key economic data from the UK this morning showed persistent wage pressures despite slowing growth, while traders await the ZEW sentiment survey and ECB commentary from Europe. The recent U.S.-China trade truce has provided temporary stability, though structural tensions remain. Federal Reserve officials are deeply divided on December rate cut prospects, with markets pricing in roughly 63% probability of easing.

The Dollar Index (DXY)

Key news events today

No major news event

What can we expect from DXY today?

The US dollar remains in a holding pattern as traders balance optimism about the potential end to the government shutdown against concerns about economic growth, consumer sentiment near multi-year lows, and uncertainty over the Fed’s rate path. With US banks closed for Veterans Day, market focus will shift to Fed speaker commentary on Wednesday for further clues about December policy. The fundamental backdrop favors caution, with the dollar likely to remain range-bound until key economic data resumes and provides clarity on the trajectory of growth and inflation.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) voted, by majority, to lower the federal funds rate target range by 25 basis points to 3.75% — 4.00% at its October 28–29, 2025, meeting, marking the second consecutive cut following the 25 basis points reduction in September.
• The Committee maintained its long-term objectives of maximum employment and 2% inflation, noting that the labor market continues to soften, with modest job creation and an unemployment rate edging higher. In comparison, inflation remains above target at around 3.0%.
• Policymakers highlighted ongoing downside risks to economic growth, tempered by signs of resilient economic activity. September’s consumer price index (CPI) came in slightly lower than expected at 3.0% year-over-year, easing inflation pressure but still warranting vigilance given tariff-driven price effects.
• Economic activity expanded modestly in the third quarter, with GDP growth estimates around 1.0% annualized; however, uncertainty remains elevated amid persistent global trade tensions and the U.S. government shutdown, which is impacting data availability.
• The updated Summary of Economic Projections reflects an anticipated unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections holding near 3.0%, indicating a slow easing path ahead.
• The Committee emphasized its flexible, data-dependent approach and underscored that future policy adjustments will be guided by incoming labor market and inflation data. As in prior meetings, there was dissent, including one member advocating a more aggressive 50-basis-point cut.
• The FOMC announced the planned conclusion of its balance sheet reduction (quantitative tightening) program, intending to cease runoff in the near term to maintain market stability, with Treasury redemption caps held steady at $5 billion per month and agency mortgage-backed securities caps at $35 billion.
• The next meeting is scheduled for 9 to 10 December 2025.

Next 24 Hours Bias
Weak Bullish

Gold (XAU)

Key news events today

No major news event

What can we expect from Gold today?

Gold’s strong performance reflects a convergence of supportive factors, including rising expectations of Federal Reserve rate cuts amid weak economic data, progress toward resolving the U.S. government shutdown, continued central bank purchases led by China, a softer U.S. dollar, and ongoing geopolitical uncertainties. The precious metal has broken through the psychologically significant $4,100 level, reaching a three-week high.
Next 24 Hours Bias   
Medium Bullish

The Euro (EUR)

Key news events today

No major news event

What can we expect from EUR today?

The euro is consolidating near 1.1555 after recovering from early November lows. While the currency has stabilized, analysts expect continued range-bound trading with downside risks toward 1.1445 and upside potential capped around 1.1605-1.1835. The ECB’s commitment to holding rates steady contrasts with potential Fed easing, though persistent eurozone growth concerns and investor morale deterioration temper bullish expectations.

Central Bank Notes:

• The Governing Council of the ECB kept the three key interest rates unchanged at its 30 October 2025 meeting. The main refinancing rate remains at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. This decision reflects policymakers’ assessment that the current monetary stance remains consistent with medium-term price stability, while incoming data confirm a gradual return of inflation towards the target.
• Recent indicators point to stable price dynamics. Headline inflation remains near the 2% mark, with energy prices contained and food inflation easing slightly after earlier supply bottlenecks. Wage growth continues to moderate, contributing to the slowdown in domestic cost pressures. The ECB reiterated its commitment to a data-driven, meeting-by-meeting approach and emphasized flexibility amid uncertain global financial conditions.
• Eurosystem staff projections have not been materially altered since September. Headline inflation averages remain at 2.0% for 2025, 1.8% for 2026, and 2.0% for 2027. Recent softening in producer prices and subdued pipeline pressures suggest limited upside risks to inflation, though geopolitical tensions and potential commodity shocks continue to pose uncertainties to the outlook.
• Euro area GDP growth remains on track with earlier forecasts, projected at 1.1% for 2025, 1.1% for 2026, and 1.4% for 2027. Forward-looking indicators, including PMIs and industrial sentiment surveys, signal some stabilization in activity following weakness in the third quarter. Public investment and recovering export activity are expected to offset softer private sector demand in the near term.
• The labor market remains resilient, with unemployment rates at multi-decade lows and participation rates strong. Real income growth continues to support household spending, even as consumption growth normalizes from earlier highs. Financing conditions remain favorable, aided by stable banking sector liquidity and improved credit demand among small and medium-sized firms.
• Business sentiment remains mixed, reflecting lingering uncertainty over global trade policy and the path of US tariffs. However, easing supply chain costs and improved export competitiveness due to softer exchange rates are providing some relief to manufacturing and external-oriented sectors.
• The Governing Council reaffirmed that future decisions will depend on an integrated assessment of incoming data—covering inflation trends, financial conditions, and the state of policy transmission. The Council emphasized that no pre-set path for rates exists; keeping all options open should the economic outlook shift markedly.
• Balance sheet reduction continues smoothly, with holdings under the APP and PEPP declining as reinvestments have ceased. The ECB confirmed that the pace of portfolio runoff remains in line with its previously communicated normalization plan, supporting a gradual withdrawal of monetary accommodation in a predictable manner.
• The next meeting is on 17 to 18 December 2025

Next 24 Hours Bias
Weak Bullish

The Swiss Franc (CHF)

Key news events today

No major news event

What can we expect from CHF today?

The Swiss franc exhibits mixed performance, maintaining long-term strength from safe-haven demand while showing short-term volatility against the dollar. Key developments include unexpectedly weak October inflation (0.1% y/y) sparking speculation about potential SNB rate cuts below zero, though policymakers currently signal comfort with the 0% rate until the December 11 meeting. The franc faces structural pressures from punitive US tariffs (39% on most goods), prompting downward revisions to Swiss growth forecasts for 2025-2026 to 1.3% and 0.9% respectively.

Central Bank Notes:

• The SNB maintained its key policy rate at 0% during its meeting on 25 September 2025, pausing a sequence of six consecutive rate cuts as inflation stabilized and the Swiss franc remained firm.
• Recent data showed a modest rebound in inflation, with Swiss consumer prices rising 0.2% year-on-year in August after staying above zero for three consecutive months; this helped alleviate fears of deflation that were mounting earlier in the year.
• The conditional inflation forecast remains broadly unchanged from June: headline inflation is expected to average 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027. The risk of a negative rate move has diminished for now, but the SNB retains flexibility should inflationary pressures weaken again.
• The global economic outlook has deteriorated further, weighed down by heightened trade tensions—especially with the U.S.—and ongoing uncertainty in key Swiss export markets.
• Swiss GDP growth moderated in Q2 after a strong Q1 boosted by front-loaded U.S. exports. The SNB expects growth to slow and remain subdued, with forecasted GDP expansion between 1% and 1.5% in both 2025 and 2026.
• Labor market sentiment in the Swiss industrial sector has softened on concerns over export competitiveness and potential adjustments to production, but the overall growth outlook stays broadly unchanged
• The SNB reiterated its readiness to respond as needed if deflation risks re-emerge, emphasizing its commitment to medium-term price stability and a robust, transparent communication policy, with the introduction of more detailed monetary policy minutes beginning in October.
• The next meeting is on 11 December 2025.

Next 24 Hours Bias
Medium Bearish

The Pound (GBP)

Key news events today

Claimant Count Change (7:00 am GMT)

Average Earnings Index 3m/y (7:00 am GMT)

What can we expect from GBP today?

The British pound faces a pivotal week as critical employment data released today will significantly influence the Bank of England’s December rate decision. With Governor Bailey positioned as the swing voter favoring data-dependent easing, worse-than-expected unemployment or wage figures could cement expectations for a pre-Christmas rate cut. The upcoming Autumn Budget on November 26 adds further uncertainty, with potential tax increases weighing on the currency’s medium-term outlook.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) met on 6 November 2025 and voted by a majority of 7–2 to keep the Bank Rate unchanged at 4.00 percent for a second consecutive meeting. The decision reflects the Committee’s cautious approach as inflation remains above target, but underlying economic momentum continues to weaken. Two members maintained their vote for a 25-basis-point cut, citing further signs of labor market softening and weak business sentiment.
• The BOE adjusted its guidance on quantitative tightening (QT), maintaining the reduced pace established in September. The planned reduction of UK government bond holdings remains at £67.5 billion over the next 12 months, leaving the current gilt balance near £550 billion. Policymakers described the recalibrated QT path as “appropriate for current market conditions,” emphasizing the importance of liquidity management amid heightened volatility.
• Headline inflation moderated slightly to 3.6 percent in October from 3.8 percent previously, driven by easing food and transport prices. However, core inflation has shown only gradual progress, holding near 3.9 percent. The MPC noted that services inflation and administered energy costs continue to exert pressure, highlighting the challenge of achieving the 2 percent target sustainably. The Committee’s latest projections see inflation falling toward 3 percent by mid-2026, with further downside expected if energy and wage dynamics continue to normalize.
• Economic activity remains subdued. Estimates place Q3 GDP growth close to zero, with both business output and consumer spending restrained. The unemployment rate has edged up to 4.8 percent, while pay growth cooled to just under 5 percent year-on-year. MPC members acknowledged that pay settlements are weakening further, signaling an easing in labor cost pressures as demand softens. Surveys from the manufacturing and services sectors suggest muted hiring intentions through year-end.
• International factors continue to complicate the policy outlook. Fluctuating oil prices—partly linked to renewed Middle East tensions—alongside fragile global demand have contributed to higher market volatility. The MPC reiterated that external shocks, including global food and energy disruptions, could temporarily slow the disinflation path but remain unlikely to derail the medium-term moderation in prices.
• The Committee assessed risks around inflation as balanced. Downside risks arise from sluggish domestic growth and declining real income momentum, while upside risks remain tied to elevated inflation expectations and stubborn services inflation. Policymakers emphasized the need for patience, maintaining that any rate cuts ahead of clear inflation progress could undermine confidence in policy credibility.
• The MPC’s overall stance remains restrictive but increasingly balanced, with future moves expected to follow a cautious, data-driven trajectory. The Committee reaffirmed that monetary policy will stay tight until there is compelling evidence that inflation is returning to the 2 percent target on a durable basis.
• The next meeting is on 18 December 2025.
  
  Next 24 Hours Bias
  Weak Bullish 

The Canadian Dollar (CAD)

Key news events today

No major news event

What can we expect from CAD today?

The Canadian Dollar strengthened on November 11, 2025, with USD/CAD trading around 1.4020 as robust employment data, higher oil prices, and US Dollar weakness supported the loonie. Canada added 66,600 jobs in October versus expectations of a 2,500 decline, pushing unemployment down to 6.9% and wages up to 3.5% year-over-year. This data reinforces expectations that the Bank of Canada may pause its rate-cutting cycle after lowering rates to 2.25% in October.

Central Bank Notes:

• The Council noted that U.S. tariff tensions have eased slightly following early progress in bilateral discussions, though the external trade environment remains fragile. Businesses continue to hold back on long-term investment, with the Bank highlighting that sustained clarity on U.S. trade policy is needed to restore confidence.
• The Bank acknowledged that uncertainty persists despite the softer U.S. tone, as incoming data show limited improvement in export orders. The manufacturing sector has stabilized but remains below pre-2024 output levels, reflecting weak global demand and cautious corporate spending.
• Canada’s economy showed tentative signs of recovery in early Q4, with GDP estimated to expand by 0.3% in October after two quarters of contraction. Mining and energy activity strengthened modestly, aided by steady crude demand, while goods exports posted a fractional gain.
• Service sector growth remained uneven, supported mainly by tourism-related and technology services. However, retail spending and household consumption were subdued, constrained by slower job creation and lingering consumer caution. The Bank judged overall momentum as fragile but improving marginally.
• Housing activity showed modest reacceleration in major urban markets as mortgage rates stabilized near record lows. Nonetheless, affordability pressures and stricter lending standards continue to cap overall resale volumes, leading to only a gradual recovery in the housing sector.
• Headline CPI inflation rose to 2.1% in October, reaching the Bank’s target for the first time in six months. Higher energy prices and a modest uptick in food and shelter costs drove the increase. Core inflation measures remained stable, suggesting underlying price pressures are contained.
• The Governing Council reiterated its data-dependent stance, indicating that the current policy rate remains appropriate amid tentative growth and balanced inflation risks. Officials noted that while additional stimulus is not ruled out, the emphasis has shifted toward monitoring the sustainability of the recovery rather than immediate rate adjustments.
• The next meeting is on 17 to 18 December 2025.

Next 24 Hours Bias
Medium Bullish

Oil

Key news events today

API crude oil stock (8:30 pm GMT)

What can we expect from Oil today?

Oil prices slipped as oversupply concerns continue to weigh on market sentiment despite recent US sanctions on major Russian oil producers. WTI traded near $60 per barrel while Brent hovered around $64, with both benchmarks consolidating after a modest Monday gain. The market faces a growing surplus as OPEC+ increases production by 137,000 barrels per day monthly while global demand growth remains anemic at just 710,000 barrels per day—far below historical averages.

Next 24 Hours Bias
Medium Bearish