IC Markets Global – Asia Fundamental Forecast | 28 January 2026
What happened in the U.S. session?
Trump’s nonchalant stance on dollar weakness as the dominant headline, slamming the USD across pairs like EUR/USD and USD/JPY while lifting gold to records and oil higher, with equities mixed but S&P 500 hitting new highs on tech earnings hype ahead of FOMC; UnitedHealth shares bore the brunt of corporate disappointments amid a quiet macro calendar.
What does it mean for the Asia Session?
Australia’s hotter-than-expected CPI (boosting AUD), BoJ hawkish minutes (USD/JPY volatility), and Fed outcomes influencing dollar and risk assets, alongside gold’s record highs and steady oil amid supply news positioning opportunities in weakening USD pairs and commodities.
The Dollar Index (DXY)
Key news events today
Federal Funds Rate (7:00 pm GMT)
FOMC Statement (7:00 pm GMT)
FOMC Press Conference (7:30 pm GMT)
What can we expect from DXY today?
The U.S. dollar continued its sharp decline, trading near multi-year lows amid a “crisis of confidence” fueled by President Trump’s dismissal of the currency’s weakness, which traders interpreted as a signal to sell aggressively. The Dollar Index (DXY) hovered around 95.96 after dropping over 1% the prior session to a four-year low of 95.57, down roughly 2.3% year-to-date, with the euro surpassing $1.20 for the first time since 2021 and the yen strengthening to near 152.60 per dollar.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) is widely expected to hold the federal funds rate target range steady at 3.50%–3.75% at its January 27–28, 2026, meeting, marking the second consecutive pause after three 25-basis-point cuts in late 2025.
- The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market remaining soft as the unemployment rate stood at 4.4% in December 2025 amid modest job gains of 50,000.
- Officials note balanced risks to growth and employment alongside sticky inflation, with CPI at 2.7% year-over-year in December 2025 and core PCE at 2.8% due to tariffs and housing pressures; headline PCE at 2.6%.
- Economic activity expanded robustly at 4.4% annualized in Q3 2025, with Q4 estimates around 5% per Atlanta Fed GDPNow, supported by consumer spending despite prior trade tensions and shutdown effects.
- December 2025’s Summary of Economic Projections forecasts 2025 unemployment at a median of 4.5%, 2026 GDP growth at 2.3%, and core PCE at 2.5% (down from prior 2.6%), with the dot plot signaling one more cut in 2026; January updates may reflect resilient Q4 growth.
- The Committee maintained its data-dependent approach, noting a stable but soft labor market and inflation above target, while holding rates steady at 3.50%-3.75%; dissents likely persist amid divisions on the pace of easing.
- The FOMC continues its adjusted quantitative tightening post-December 1, 2025, conclusion of prior program, with Treasury rolloff caps at $5 billion per month and agency MBS at $35 billion per month to maintain ample reserves.
- The next meeting is scheduled for March 17–18, 2026.
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
Federal Funds Rate (7:00 pm GMT)
FOMC Statement (7:00 pm GMT)
FOMC Press Conference (7:30 pm GMT
What can we expect from Gold today?
Gold prices surged past $5,200 per ounce, marking a historic high amid heightened safe-haven demand driven by US policy uncertainty, geopolitical tensions, and a weakening dollar. Spot gold reached $5,219.97 per ounce early in the day, up over 20% year-to-date, fueled by investor concerns over potential new tariffs announced by President Donald Trump on South Korean imports and risks of a US government shutdown by January 30.
Next 24 Hours Bias
Strong Bullish
The Australian Dollar (AUD)
Key news events today
CPI m/m (12:30 am GMT)
CPI y/y (12:30 am GMT)
Trimmed Mean CPI m/m (12:30 am GMT)
What can we expect from AUD today?
The Australian Dollar (AUD) has shown strength recently, reaching near three-year highs against the USD amid positive economic data and hawkish RBA expectations. On January 28, 2026, it climbed sharply before edging down slightly, influenced by fresh CPI inflation data printing at 3.6% YoY as expected, alongside robust PMI figures and jobs data supporting rate hike bets.
Central Bank Notes:
- The Reserve Bank of Australia held its cash rate steady at 3.60% at the November 2025 policy meeting, adopting a cautious tone amid a surprise uptick in inflation data for the September quarter. This marks the fourth consecutive pause since the 25 basis point cut in August. The Board attributed some of the inflation rise to temporary factors like higher petrol prices and council rates, but noted signs of more persistent pressures from consumer demand.
- Policymakers emphasized vigilance on inflation, with trimmed mean inflation expected to remain elevated in the near term before nearing the 2–3% target midpoint by mid-2027. Recent data showed underlying inflation staying above target until at least the second half of 2026, prompting upward revisions to forecasts. Capacity pressures are seen as slightly more pronounced than previously assessed, delaying any easing.
- Headline CPI for the September quarter exceeded expectations, driven partly by temporary items, while underlying measures signal ongoing stickiness. The shift to monthly CPI reporting, with the first full edition in November 2025, will enhance real-time inflation monitoring. Housing and services remain resilient contributors to price pressures.
- Domestic demand shows firmness in services alongside below-trend growth elsewhere, with capacity pressures not expected to ease significantly. The labor market is gradually softening, with unemployment projected to stabilize around 4.4%, though wage growth and productivity dynamics keep unit labor costs a concern. Household spending faces headwinds from high borrowing costs.
- Global risks include geopolitical tensions and commodity volatility, set against modestly revised-up world growth outlooks. The Board describes its policy as mildly restrictive and data-dependent, balancing inflation control with employment goals. No rate hike was considered despite the inflation surprise.
- Monetary policy remains mildly restrictive to address lingering price stability risks amid household and global vulnerabilities. Communications reaffirm the dual mandate of 2–3% inflation and full employment, with readiness to adjust based on incoming data.
- Market expectations point to the cash rate holding through early 2026, with a possible modest cut to 3.3% mid-year if inflation eases as forecast. The new monthly CPI data will be key for timely insights.
- 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 2 to 3 February 2026.
Next 24 Hours Bias
Strong Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from NZD today?
The New Zealand Dollar held firm near 0.60 USD, extending recent gains driven by domestic economic strength, higher-than-expected inflation, and a weakening US Dollar amid trade tensions and Fed watch; traders anticipate RBNZ policy tightening later in the year, with the kiwi up over 2.8% monthly despite minor daily dips.
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 Bullish
The Japanese Yen (JPY)
Key news events today
No major news event
What can we expect from JPY today?
The yen’s rally reflects intervention risks, BoJ hawkishness, and dollar weakness, but fiscal worries and positive risk sentiment may cap further upside. USD/JPY faces bearish near-term pressure above key supports, with upcoming Tokyo inflation and BoJ data in focus.
Central Bank Notes:
- The Policy Board of the Bank of Japan meets on 22–23 January 2026, with markets fully expecting the short-term policy rate to remain at 0.75%, following the December 2025 hike, as the bank assesses the impact of prior tightening while emphasizing gradual, data-dependent adjustments.
- The BOJ will continue targeting the uncollateralized overnight call rate around 0.75% and signal that future rate hikes depend on the effects of recent increases on bank lending, corporate financing, and economic activity, with some policymakers eyeing a possible move as early as April.
- JGB purchase tapering proceeds on schedule, with outright purchases reduced by ¥400 billion per quarter through March 2026, then ¥200 billion per quarter from April to June 2026, aiming for around ¥2 trillion monthly in Q1 2027, with flexibility if market conditions worsen.
- Japan’s economy showed recovery signs after the Q3 2025 contraction, with Q4 2025 GDP growth estimated positively amid export strength, though business sentiment among manufacturers softened to a six-month low of +7 in January 2026 due to weaker overseas demand.
- Core consumer inflation (excluding fresh food) eased to 2.3% year-on-year in December 2025 Tokyo CPI, down from 2.8-3.0% peaks earlier, while core-core (excluding fresh food and energy) stood at 2.6%, both above the 2% target but with moderating cost pressures.
- Near-term input costs continue easing from faded import surges, but services inflation and steady wage gains with early 2026 negotiations targeting 5% hikes sustain price momentum; medium-term inflation expectations remain anchored above 2%, tilting upside risks.
- In the coming quarters, real growth may moderate below potential amid tighter conditions and yen weakness, but accommodative real rates, real wage gains, and fiscal support are poised to bolster private consumption and investment recovery.
- Medium-term, stabilizing overseas demand and tight labor markets should drive wage growth and keep core inflation gradually around or above 2%, allowing cautious rate normalization if financial conditions stay supportive.
- The next meeting is scheduled for April 2026.
Next 24 Hours Bias
Strong Bullish
Oil
Key news events today
EIA Crude Oil Inventories (2:30 pm GMT)
What can we expect from Oil today?
Oil prices showed mixed movements today amid ongoing supply concerns from a recent US winter storm and geopolitical tensions. Brent crude hovered around $67 per barrel, slightly down, while WTI edged up to near $62-$63, reflecting a four-month high influenced by a weaker dollar and President Trump’s statements on Iran.
Next 24 Hours Bias
Weak Bearish
