IC Markets Global – Asia Fundamental Forecast | 01 December 2025
What happened in the U.S. session?
The overnight U.S. session on November 28-29 concluded a volatile but ultimately positive month for equities, with the S&P 500 and Dow extending their monthly winning streaks to seven months while the Nasdaq snapped its seven-month run. The most impacted instruments included Intel (rallying on Apple partnership speculation), crypto-related stocks (rising with Bitcoin), natural gas producers like EQT (benefiting from cold weather), and AI stocks (under continued pressure despite sector-wide strong fundamentals).
What does it mean for the Asia Session?
Governor Ueda’s tone will be pivotal; any hawkish hints about December rate hike timing could strengthen the yen significantly. The BOJ has maintained rates at 0.5% since January, and markets are increasingly expecting the next hike in December or January. ISM data will either validate or challenge the current 86% probability of a December Fed cut.
Stronger-than-expected readings could support the dollar; weaker data would reinforce rate cut expectations.The late-November rally in global markets suggests risk appetite has recovered, but AI valuation concerns and the upcoming Fed decision remain key swing factors.
The Dollar Index (DXY)
Key news events today
ISM Manufacturing PMI (3:00 pm GMT)
ISM Manufacturing Prices (3:00 pm GMT)
What can we expect from DXY today?
The US dollar is starting Monday, 1 December 2025, on the back foot, with traders focused on the upcoming US manufacturing data and growing expectations of a December Federal Reserve rate cut, which together keep the Dollar Index under mild pressure near recent lows. Market attention today is centered on the ISM Manufacturing PMI and related manufacturing indicators, which are key for confirming whether US growth is slowing enough to justify that cut.
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 Bearish
Gold (XAU)
Key news events today
ISM Manufacturing PMI (3:00 pm GMT)
ISM Manufacturing Prices (3:00 pm GMT)
What can we expect from Gold today?
Gold enters Monday’s session extended but still bid after a powerful 2025 rally, trading around 4,200 USD/oz with nearby resistance just above and first meaningful supports below 4,000. The market tone is “buy‑the‑dip” as long as expectations for Fed easing, heavy central‑bank buying, and elevated geopolitical risk remain intact, but a deeper correction is possible if US data or policy guidance push yields higher in the near term.
Next 24 Hours Bias
Medium Bullish
The Australian Dollar (AUD)
Key news events today
No major news event
What can we expect from AUD today?
Mildly constructive, with AUD supported on dips by firm domestic inflation and reduced RBA‑cut expectations, but capped by event risk from upcoming US data and December FOMC. Shifts in Fed‑cut pricing, US ISM and labour data, and any surprises in Australian data or RBA communication; sustained trade above the mid‑0.65s would keep the upside correction alive, while a break back below the low‑0.64s would reopen the downside toward 0.63.
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 Bullish
The Kiwi Dollar (NZD)
Key news events today
RBNZ Gov Breman Speaks (9:00 pm GMT)
What can we expect from NZD today?
The New Zealand Dollar (NZD) is trading with a cautious tone today, with markets focused on the start of Anna Breman’s term as the new Reserve Bank of New Zealand (RBNZ) Governor on 1 December 2025 and on broader risk sentiment rather than any major local data releases.
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
BOJ Gov Ueda Speaks (1:05 am GMT)
What can we expect from JPY today?
The dominant theme is that the yen’s medium‑term path hinges on how strongly Ueda leans hawkish in today’s speech and whether the BOJ delivers another rate hike in December; a clear signal toward tightening would likely support a stronger yen, while a cautious tone would keep carry trades and yen weakness in play. Beyond today, markets expect BOJ normalization to stay very gradual, with only limited hikes priced over 2026, so unless global risk sentiment sours or U.S. rate‑cut expectations accelerate, the yen is still seen as relatively weak compared with other majors on a multi‑month horizon.
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
Medium Bearish
Oil
Key news events today
No major news event
What can we expect from Oil today?
Oil is trading in the high‑50s to low‑60s per barrel range, with both Brent and WTI hovering just below recent highs and still locked in a broader downtrend driven by oversupply concerns and cautious demand. OPEC+ is expected to keep its output policy broadly unchanged after a year of gradual supply increases, reinforcing expectations of a loose market into early 2026.
Next 24 Hours Bias
Weak Bearish
