IC Markets Global – Europe Fundamental Forecast | 12 June 2026

IC Markets Global – Europe Fundamental Forecast | 12 June 2026

What happened in the Asia session?

Dramatic geopolitical reversal: President Trump’s cancellation of planned U.S. strikes on Iran and his indication that a peace deal could be signed this weekend triggered a global risk-on rally, sending Asian stocks higher while oil plummeted to two-month lows (Brent below $90/bbl) and bond yields dropped. China’s May inflation data added macro nuance. CPI held steady at 1.2% YoY while PPI surged to 3.9% YoY (a near-4-year high), driven by AI and commodity strength, reinforcing expectations for continued policy support.

What does it mean for the Europe & US sessions?

Persistent inflation pressures and evolving geopolitical dynamics, with May’s inflation data dominating the macro narrative. U.S. wholesale inflation (Producer Price Index) rose 1.1% monthly and 6.5% annually in May, the highest year-on-year reading since November 2022, while consumer prices accelerated to a 4.2% annual CPI increase, the fastest rate since May 2023, reinforcing expectations that the Federal Reserve may hike interest rates later this year. In Europe, the ECB raised rates by 25 basis points in June 2026 (its first increase since 2023) and revised its 2026 inflation forecast up to 3.0%, signaling heightened concern about anchoring inflation at the 2% target.
​
The Dollar Index (DXY)

Key news events today

Prelim UoM Consumer Sentiment (2:00 pm GMT)

Prelim UoM Inflation Expectations(2:00 pm GMT)

What can we expect from DXY today?

The dollar found stability on Friday, bouncing back from seven-week lows as diplomatic progress in the Middle East, with an imminent ceasefire hope, and Trump halting Iran strikes reduced safe-haven demand. Soft PPI data eased inflation concerns and increased Fed rate-cut expectations, keeping the dollar under pressure despite its intraday recovery to 160.07 yen against Japan’s currency.

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 April 28–29, 2026, meeting, as oil prices remain elevated around $108 per barrel for Brent crude amid ongoing US-Israel tensions with Iran, alongside surging inflation from energy shocks, further delaying any 2026 rate cuts potentially beyond September.
• The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market showing mixed signals as nonfarm payrolls rose by 178,000 in March 2026—beating lowered expectations but driven partly by strike reversals—and the unemployment rate edged down to 4.3% from 4.4% in February.
• Officials face heightened risks from geopolitical tensions, soaring oil prices, and accelerating inflation, with CPI jumping to 3.3% year-over-year in March 2026 from 2.4% in February due to a 10.9% monthly energy surge, headline PCE pressured higher, and core PCE estimates around 3.1% or more.
• Economic activity continues to cool after robust Q4 2025 growth near 5%, with the Atlanta Fed GDPNow estimating Q1 2026 growth at 1.3% amid softer consumer spending, strike impacts, and labor data despite some resilience.
• March 2026’s Summary of Economic Projections forecasts 2026 unemployment at a median around 4.4%, GDP growth revised higher, and core PCE up to 2.7%, with the dot plot still signaling one cut in 2026 to a median 3.25%–3.50% funds rate amid softer labor but inflation upticks.
• The Committee maintains its data-dependent stance amid a mixed labor market, inflation well above target from oil shocks, and geopolitical risks, likely holding rates at 3.50%-3.75% with persistent divisions and hawkish tones on cuts.
• The FOMC continues its adjusted quantitative tightening, with Treasury rolloff caps at $5 billion per month and agency MBS at $35 billion per month to manage reserves amid post-2025 balance sheet adjustments.
• The FOMC continues its adjusted quantitative tightening, with Treasury rolloff caps at $5 billion per month and agency MBS at $35 billion per month to ensure ample reserves post-2025 program adjustments.
• The next meeting is scheduled for 16 to 17  June 2026.

Next 24 Hours Bias
Medium Bullish

Gold (XAU)

Key news events today

Prelim UoM Consumer Sentiment (2:00 pm GMT)

Prelim UoM Inflation Expectations(2:00 pm GMT)

What can we expect from Gold today?

Gold prices are under pressure today, Friday, as traders react to stronger-than-expected U.S. inflation data and renewed expectations that the U.S. Federal Reserve may keep interest rates higher for longer. Higher inflation and rising rate-hike expectations have strengthened the U.S. dollar, reducing the appeal of non-yielding assets like gold. At the same time, easing concerns over a potential escalation in the Middle East, after reports of possible diplomatic progress involving Iran, have slightly weakened safe-haven demand for gold.

Next 24 Hours Bias   
Strong Bearish

The Euro (EUR)

Key news events today

No major news event

What can we expect from EUR today?

The euro is being driven mainly by the European Central Bank (ECB) after a major policy shift this week. On Thursday, the ECB raised interest rates by 25 basis points to combat rising inflation pressures, marking its first rate hike in nearly three years. The move came as higher energy prices linked to ongoing Middle East tensions and elevated oil costs pushed eurozone inflation higher, with May inflation estimated at 3.2%, still above the ECB’s 2% target.

Central Bank Notes:

• The Governing Council is expected to maintain the three key rates unchanged at its June levels into July, with the main refinancing rate around 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. Policy remains on a meeting‑by‑meeting, data‑dependent footing.
• Real GDP growth is expected to be modest: around 0.9% for 2026, 1.3% for 2027, and 1.4% for 2028. Quarterly momentum implies roughly 0.2–0.3% q/q growth in Q2 2026, consistent with resilience seen late‑2025.
• Balance‑sheet normalization continues smoothly. APP and PEPP wind‑downs are effectively completed; the Eurosystem is allowing remaining longer‑dated holdings to run off. No material liquidity shortages are expected; the Governing Council will monitor transmission and market functioning closely.
• Upside risks: stronger‑than‑expected services inflation persistence, renewed energy or commodity price shocks, and tighter global financial conditions that transmit unevenly.
• The ECB is likely to keep policy rates on hold while emphasizing data dependence: future moves will be guided by incoming HICP prints, wage dynamics, and indicators of monetary transmission (credit, deposit flows, and market functioning).
• With rates expected to be on hold and inflation slightly above target for 2026, the EUR may trade with two‑way volatility; upside for EUR if euro‑area data surprise to the upside or if US data weaken relative to euro‑area, but limited unilateral appreciation given symmetric policy risks.
• Curve pricing should reflect a prolonged period of unchanged rates with modest probability of hikes if upside inflation surprises continue; front-end stays anchored, while longer‑dated yields respond to inflation‑expectation movements and global risk sentiment.

​The next meeting is on 22 to 23 July 2026

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 (CHF) is seeing mixed but closely watched developments today, Friday, 12th June 2026, mainly driven by expectations around next week’s Swiss National Bank (SNB) policy meeting and global risk sentiment. Markets widely expect the SNB to keep interest rates unchanged at 0.0% during its June 18 policy decision, as Swiss inflation remains subdued despite elevated global energy prices. However, the franc continues to attract attention as a traditional safe-haven currency amid geopolitical uncertainty and volatility in oil markets.

Central Bank Notes:

• At its monetary policy assessment on 19 March 2026, the Swiss National Bank (SNB) is widely expected to leave the policy rate unchanged at 0%, continuing the extended pause since September 2025, as the Governing Board considers current settings adequate to keep inflation near the target without resorting to negative rates.
• Inflation data since December indicate persistent weakness, with headline CPI hovering around 0% year-on-year through early 2026 and core measures subdued at roughly 0.4%, underscoring limited price pressures and lingering, though contained, deflation risks.
• The SNB’s updated conditional inflation forecast shows minimal change from December, with averages of about 0.2% in 2025 (now complete), 0.3% in 2026, and 0.6% in 2027 under a steady 0% policy rate. However, recent flat CPI readings may slightly lower near-term expectations, preserving scope for further easing if needed.
• Global conditions remain challenging, marked by U.S. tariff escalations under President Trump, subdued external demand, and uncertainties in major export markets such as Europe and the U.S., prompting the SNB to exercise caution despite resilient Swiss domestic activity.
• Sentiment in manufacturing and export sectors stays soft amid franc appreciation and weaker foreign orders, squeezing margins. Yet, overall GDP growth is expected to be around 1.5% in 2026, with unemployment edging up modestly from historic lows.
• The SNB reaffirms its readiness to intervene via rate cuts or FX operations should deflationary pressures intensify, while emphasizing clear communication through detailed meeting minutes and coordination with global partners on currency matters.

The next meeting is on 18 June 2026.

Next 24 Hours Bias
Medium Bullish

The Pound (GBP)

Key news events today

GDP m/m (6:00 am GMT)

What can we expect from GBP today?

The British pound (GBP) is trading cautiously today, as markets focus on key UK economic data and growing expectations around the upcoming June 18 Bank of England interest rate decision. Sterling has been relatively steady against the U.S. dollar near the 1.34 level, but momentum has softened as traders await the UK monthly GDP report, with expectations of a slight economic contraction that could pressure the pound if confirmed.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) met on 29 April 2026, maintaining the Bank Rate at 3.75 per cent, with the decision details published on 30 April 2026 alongside the quarterly Monetary Policy Report. This hold follows the unanimous 9-0 vote at the prior 18 March 2026 meeting, amid persistent energy shocks from the Middle East conflict overriding earlier cut expectations. No specific vote split for April has been detailed yet, but consensus previews indicate a hold.
• Quantitative tightening (QT) continues unchanged at the 2025 pace for gilt holdings reductions, supporting balance-sheet normalization while monitoring liquidity and maintaining restrictiveness against ongoing shocks.
• Headline CPI inflation rose to 3.3% in March 2026 from energy and motor fuel surges due to Middle East tensions, expected to stay between 3% and 3.5% through the summer, well above the 2% target. The April Monetary Policy Report outlines scenarios in which inflation peaks above 3.5% by the end of 2026 in the baseline, then eases below 2% in three years, or reaches 6%+ in adverse cases requiring tighter policy.
• UK growth outlook weakens further into Q2-Q3 2026 amid energy-driven cost pressures, rising unemployment risks, and softening confidence, with prior pay growth cooling now vulnerable to business pass-throughs.
• Global risks from the Middle East conflict persist, fueling energy/commodity volatility and sterling/gilt fluctuations; MPC views direct impacts as containable if demand slackens to curb secondary inflation effects.
• Inflation risks remain upward-biased due to energy persistence, potential wage embedding, and shock duration uncertainty, balanced against downside from economic slack and labor market softening.
• The MPC maintains a data-dependent stance, with policy still restrictive; the April Report provides fuller shock analysis, but no easing is signaled, yet members monitor for 2% sustainability, with Governor Bailey emphasizing vigilance.
• The next meeting is on 18 June 2026.
  
  Next 24 Hours Bias
  Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news event                     

What can we expect from CAD today?

The Canadian dollar (CAD) is under pressure today, as traders react to a mix of monetary policy, oil price volatility, and U.S.-Canada trade uncertainty. Earlier this week, the Bank of Canada held interest rates steady at 2.25% for the fifth consecutive meeting, signaling a cautious “wait-and-see” stance as Canada deals with soft economic growth, weak business investment, and lingering inflation risks. At the same time, the loonie recently slipped to a seven-month low against the U.S. dollar due to widening yield spreads between U.S. and Canadian bonds, making the USD more attractive to investors.
​
Central Bank Notes:

• At its 10 June 2026 meeting, the Governing Council maintained the overnight rate target at 2.25%, continuing the policy pause begun earlier in the year. The decision matched market expectations and reflected the Committee’s assessment that the current stance remains appropriately restrictive to secure 2% inflation over the policy horizon.
• The Bank noted persistent global headwinds: geopolitical tensions in the Middle East and renewed U.S. trade friction continue to weigh on sentiment and supply chains. These risks are asymmetric and could slow foreign demand or push commodity price volatility higher.
• Real GDP growth is estimated to have continued into Q2 at roughly a 2.0–2.3% annualized pace, broadly consistent with the Bank’s April projection of sustained momentum. Strength remained concentrated in resource shipments and exports, supported by robust global energy demand, while business investment showed only tentative improvement.
• The labour market remains tight but is showing early signs of rebalancing: employment growth continued, and the unemployment rate stayed near recent lows, but wage growth has moderated from its peak. Participation edged up modestly in some regions, consistent with slower wage pressure ahead.
• ​Headline CPI remained close to 2.0% year-over-year in April–May prints, within the inflation target band. Core indicators—CPI-trim, CPI-median, and a trimmed mean—tracked around 2.3–2.6%, showing modest further easing compared with earlier in the year.
• Manufacturing PMI remained in expansionary territory into May, supported by export orders and healthy energy-sector activity. Firms reported steady demand for intermediate goods, though capex intentions remain cautious.
• Credit growth continued at a moderate pace. Bank lending spreads and deposit dynamics showed limited pass-through from global tightening episodes. Mortgage rates remain somewhat elevated but stable, underpinning the observed moderation in housing activity.
• The next meeting is on 16 July 2026.

Next 24 Hours Bias
Weak Bearish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Oil prices are under pressure today, Friday, as geopolitical tensions in the Middle East appear to be easing. Crude prices fell sharply after reports that the U.S. stepped back from planned military action against Iran, reducing fears of an immediate supply disruption through the Strait of Hormuz, a key route for global oil shipments. As of today, Brent crude is trading below $90 per barrel while WTI crude has slipped toward the mid-$80 range, marking a continuation of this week’s bearish move.

Next 24 Hours Bias
Weak Bearish