IC Markets Global – Asia Fundamental Forecast | 26 November 2025
What happened in the U.S. session?
During the U.S. session overnight, a significant rally in U.S. stock indices driven by renewed expectations of a Federal Reserve rate cut in December, supported by comments from Fed officials about rising labor market risks and a more accommodative policy stance. Major macroeconomic data releases included retail sales, producer price data for September, consumer confidence for November, and home price indices, with delayed releases due to the recent government shutdown.
What does it mean for the Asia Session?
RBNZ delivering a more hawkish message than expected could spark volatility in Antipodean currencies. Australia’s new monthly CPI format introduces uncertainty around data quality and interpretation. UK budget execution risk remains high given the fiscal constraints. The absence of US GDP data removes a key anchor for market expectations. Continued Fed dovish repricing supports risk assets and Asian equities. China property stimulus speculation could lift sentiment for property developers and domestically-focused stocks.
The Dollar Index (DXY)
Key news events today
Unemployment Claims (1:30 pm GMT)
Core Durable Goods Orders m/m (1:30 pm GMT)
Durable Goods Orders m/m (1:30 pm GMT)
CB Consumer Confidence (Tentative)
What can we expect from DXY today?
The US Dollar faces a pivotal trading day with the Dollar Index (DXY) hovering near the 100 level amid heightened expectations of a Federal Reserve rate cut in December. Key drivers include dovish Fed signals, important economic data releases (jobless claims, durable goods orders), and significant global events, including the RBNZ rate decision, UK Autumn Budget, and ECB Financial Stability Review. Markets are pricing approximately 75-81% probability of a 25 basis point rate cut at the December FOMC meeting, up sharply from around 42% just a week ago.
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 below expectations at 3.0% year-over-year, easing inflationary pressure but still warranting vigilance amid 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 anticipates an unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections remaining 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. Treasury redemption caps will remain steady at $5 billion per month, and agency mortgage-backed securities caps will remain at $35 billion.
- The next meeting is scheduled for 9 to 10 December 2025.
Next 24 Hours Bias
Medium Bullish
Gold (XAU)
Key news events today
Unemployment Claims (1:30 pm GMT)
Core Durable Goods Orders m/m (1:30 pm GMT)
Durable Goods Orders m/m (1:30 pm GMT)
CB Consumer Confidence (Tentative)
What can we expect from Gold today?
Gold is expected to range trade between $4,000 and $4,160-$4,200 in the near term, with the December Fed rate cut probability remaining the primary directional driver. A break above $4,200 with momentum could see gold retest October highs, while weak data surprising to the upside or hawkish Fed rhetoric could push prices toward the $3,950-$4,000 support zone. The combination of Wednesday’s data releases, Thanksgiving liquidity reduction, and ongoing geopolitical developments creates a potentially volatile environment for precious metals traders heading into month-end.
Next 24 Hours Bias
Medium Bearish
The Australian Dollar (AUD)
Key news events today
CPI y/y (12:30 am GMT)
What can we expect from AUD today?
The Australian dollar faces a pivotal session with the inaugural complete monthly CPI release taking center stage. A reading at or above 3.6% would reinforce expectations that the RBA will maintain its cautious, hold-steady approach, providing modest support for the currency. Conversely, a softer inflation print could revive rate cut speculation and push AUD/USD toward the lower end of its range near 0.6400. Traders should also monitor the RBNZ decision and US economic data for secondary catalysts throughout the session.
Central Bank Notes:
- The Reserve Bank of Australia held its cash rate steady at 3.60% at the November policy meeting, citing persistent inflationary pressures and lingering uncertainties in both domestic and global outlooks. This is the third consecutive pause following the cut in August.
- Policymakers remain alert to renewed inflation momentum. After a temporary uptick in September’s CPI, trimmed mean inflation for Q3 stands at 3.0%, above the intended 2–3% band. The RBA now anticipates that core inflation will stay above target until at least mid-2026, delaying any hopes of further easing.
- Headline CPI climbed by 3.2% in the year to September 2025, driven by resilient housing (+2.5%) and insurance costs, while discretionary goods inflation is subdued. The transition to monthly CPI reporting from November will improve the accuracy of inflation tracking.
- Domestic demand remains firm, particularly in services and housing, while manufacturing and discretionary retail continue to lag. Household incomes have stabilized, but high borrowing costs and elevated rents are constraining consumption and risking a slowdown in Q1 2026.
- Labor market tightness persists, though job growth has moderated. Underutilization edged higher. Wage growth is plateauing, but weak productivity is keeping unit labor costs elevated—a medium-term risk that remains central to the Board’s narrative.
- The RBA highlights geopolitical tensions and volatile commodity markets as primary global risks, against a backdrop of modest upward revisions to world growth forecasts. The Board stresses that its stance remains “cautious and data-dependent,” with ongoing vigilance on inflation, labor, and spending trends.
- Monetary policy remains mildly restrictive, balancing progress on price stability against vulnerabilities in household demand and global outlook. Board communications reaffirm a dual mandate: price stability and full employment, while underscoring readiness to respond should risks materialize sharply.
- Analysts generally expect the cash rate to remain at current levels through early 2026, with only modest cuts possible later in the year if inflation moderates. The new monthly CPI release (first full edition Nov 2025) will be watched closely for timely signals on price trends.
- The next meeting is on 9 December 2025.
Next 24 Hours Bias
Medium Bearish
The Kiwi Dollar (NZD)
Key news events today
Official Cash Rate (1:00 am GMT)
RBNZ Monetary Policy Statement (1:00 am GMT)
RBNZ Rate Statement (1:00 am GMT)
RBNZ Press Conference (2:00 am GMT)
RBNZ Gov Hawkesby Speaks (8:10 pm GMT)
Retail Sales q/q (9:45 pm GMT)
What can we expect from NZD today?
Wednesday represents a pivotal moment for New Zealand’s monetary policy landscape. The widely expected 25 basis point rate cut to 2.25% will cap an unprecedented easing cycle that has delivered 325 basis points of cuts since August 2024. The decision comes as the New Zealand economy struggles with weak growth, elevated unemployment, and persistent inflation near the top of the target band.
The New Zealand dollar remains under pressure near seven-month lows around 0.5610, weighed down by aggressive RBNZ easing, monetary policy divergence with the US Federal Reserve, and broader global risk sentiment favoring the USD.
Central Bank Notes:
- The Monetary Policy Committee (MPC) left the Official Cash Rate (OCR) unchanged at 2.25% at its 26 November 2025 meeting, following the widely anticipated 25-basis-point reduction from 2.50%, and signaled that policy is now firmly in stimulatory territory while keeping the option of further easing on the table if needed.
- The decision was again reached by consensus, with members judging that the cumulative 325 basis points of easing over the past year warranted a period of assessment, even as several emphasized a willingness to cut further should incoming data point to a more protracted downturn or renewed disinflationary pressures.
- Headline consumer price inflation is projected to hover near 3% in late 2025 before gradually easing toward the 2% midpoint of the 1–3% target band through 2026, supported by contained inflation expectations around 2.3% over the two-year horizon and an expected pickup in spare capacity.
- The MPC noted that domestic demand remains subdued but shows tentative signs of stabilisation, with softer household spending and construction only partially offset by improving services activity; nevertheless, policymakers still expect services inflation to ease as wage growth moderates and the labour market loosens further over the coming year.
- Financial conditions continue to ease as wholesale and retail borrowing rates reprice to the lower OCR, contributing to gradually rising mortgage approvals and improving housing-related sentiment, although broader business credit growth remains patchy and sensitive to uncertainty about the durability of the recovery.
- Recent data confirm that GDP momentum is weak but not deteriorating as sharply as earlier in 2025, with high-frequency indicators pointing to a shallow recovery from a low base and ongoing headwinds from elevated living costs and fragile confidence weighing on discretionary consumption and investment.
- The MPC reiterated that external risks remain skewed to the downside, particularly from softer Chinese demand and uncertainty around United States trade policy, but noted that a lower New Zealand dollar continues to provide some offset via improved export competitiveness and support for tradables inflation.
- Looking ahead to early 2026, the Committee maintained a mild easing bias, indicating that a further cut toward 2.00–2.10% cannot be ruled out if activity fails to gain traction or if inflation undershoots projections, but current forecasts envisage the OCR remaining near 2.25% for an extended period provided inflation converges toward target and the recovery proceeds broadly as expected.
- The next meeting is on 18 February 2026.
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
Key news events today
No major news events
What can we expect from JPY today?
The Japanese yen enters Wednesday at a critical juncture, trading around 156 per dollar after recovering slightly from 10-month lows. The currency faces conflicting pressures: downward pressure from PM Takaichi’s ¥21.3 trillion stimulus package and fiscal concerns, but upward support from intensifying intervention warnings and rising expectations for a December BoJ rate hike. Traders are positioning cautiously ahead of Tokyo CPI data on Thursday and watching the 158-160 zone as the likely intervention trigger.
Central Bank Notes:
- The Policy Board of the Bank of Japan met on 30–31 October and, by a clear majority vote, decided to maintain its key monetary policy approach for the upcoming period.
- The BOJ will continue to encourage the uncollateralized overnight call rate to remain at around 0.5%, in line with the prior stance.
- The gradual quarterly reduction in monthly outright purchases of Japanese Government Bonds (JGBs) remains intact, with amounts unchanged from the previous schedule. Purchases are set to decrease by about ¥400 billion per quarter through March 2026, shifting to about ¥200 billion per quarter from April to June 2026, and targeting a ¥2 trillion purchase level for Q1 2027. The bank reaffirmed its intention to maintain flexibility, with readiness to respond if market conditions warrant an adjustment.
- Japan’s economy continues to show moderate recovery, primarily led by solid capital expenditures, although export growth and corporate activity remain restrained by external demand uncertainty and the ongoing effects of U.S. trade policies.
- Annual headline inflation (excluding fresh food) accelerated to 2.9% year-on-year in September, marking the first uptick in four months and staying above the BOJ’s 2% target. Broad-based inflation persists, with food and energy cost pressures, but wage growth continues to support household consumption. Input cost pressures from the earlier surge in imports eased slightly.
- Short-term inflation momentum could moderate as food-price hikes ease, though rent, healthcare, and service-sector price increases tied to labor shortages provide support. Firms and households maintain a gradual upward drift in inflation expectations.
- For the near term, BOJ projects growth below trend as external demand stays subdued and corporate investment plans remain cautious. Still, accommodative financial conditions and steady gains in real labor income will underpin domestic consumption.
- Over the medium term, as overseas economies recover and trade conditions normalize, Japan’s growth potential should improve. Persistent labor market tightness, higher wage settlements, and rising medium- to long-term inflation expectations are expected to keep core inflation on a gradual upward trajectory, converging toward the 2% price stability target later in the forecast horizon.
- The next meeting is scheduled for 18 to 19 December 2025.
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
EIA Crude Oil Inventories ( 2:30 pm GMT)
What can we expect from Oil today?
Crude oil prices have experienced significant downward pressure as markets head into Wednesday. WTI crude settled at approximately $57.72 per barrel while Brent crude dropped to around $62.15 per barrel on Tuesday, representing notable declines of 1.9% and 1.9% respectively. This marks oil’s lowest levels in approximately five weeks, with WTI down over 14% year-to-date and Brent falling roughly 12.5% from year-ago levels.
Next 24 Hours Bias
Medium Bearish
