IC Markets Asia Fundamental Forecast | 10 September 2025
What happened in the U.S session?
The September 9, 2025, US session was characterized by a paradoxical market response where equity indices reached record highs despite the largest jobs revision in history. The 911,000 downward revision to payrolls data solidified expectations for Fed rate cuts while simultaneously supporting risk assets. The most impacted instruments were equities (particularly healthcare and financial stocks), Treasury bonds (with rising yields), the strengthening dollar, and energy commodities benefiting from supply constraints and geopolitical tensions. Market attention now turns to this week’s inflation data, which will provide crucial input for the Fed’s September policy decision.
What does it mean for the Asia sessions?
Wednesday’s trading in Asia will be dominated by China’s inflation data, ongoing Fed rate cut speculation, and Japan’s political transition. The combination of weak US labor data, persistent Chinese deflationary pressures, and geopolitical tensions is creating a complex environment favoring safe-haven assets like gold while supporting risk assets through monetary easing expectations. Traders should monitor US PPI data later in the week as it could influence the magnitude of the Fed’s rate cut and subsequent Asian market reactions.
The Dollar Index (DXY)
Key news events today
Core PPI m/m (12:30 pm GMT)
PPI m/m (12:30 pm GMT)
What can we expect from DXY today?
The US dollar faces a pivotal week with inflation data that could either reinforce or challenge Fed rate cut expectations. While markets are largely convinced of a September rate cut, the extent and pace of future easing will depend heavily on Thursday’s CPI report. The dollar’s technical position suggests a continued bearish bias unless inflation significantly exceeds expectations. Key levels to watch include support at 97.00 and resistance at 98.37, with a break below 97.00 potentially targeting the year-to-date lows near 96.37.
Central Bank Notes:
- The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25% to 4.50% at its meeting on July 29–30, 2025, keeping policy unchanged for the fifth consecutive meeting.
- The Committee reiterated its objective of achieving maximum employment and inflation at the rate of 2% over the longer run. While uncertainty around the economic outlook has diminished since earlier in the year, the Committee notes that challenges remain and continued vigilance is warranted.
- Policymakers remain highly attentive to risks on both sides of their dual mandate. The unemployment rate remains low, near 4.2%–4.5%, and labor market conditions are described as solid. However, inflation remains somewhat elevated, with the PCE price index at 2.6% and a core inflation forecast of 3.1% for year-end 2025, up from earlier projections; tariff-related pressures are cited as a contributing factor.
- The Committee acknowledged that recent economic activity has expanded at a solid pace, with second-quarter annualized growth estimates near 2.4%. However, GDP growth for 2025 has been revised downward to 1.4% (from 1.7% projected in March), reflecting expectations of a slowdown in the coming quarters.
- In the revised Summary of Economic Projections, the unemployment rate is expected to average 4.5% in 2025, and headline PCE inflation is forecast at 3.0% for the year, with core PCE at 3.1%. Policymakers continue to anticipate that inflation will moderate gradually, with ongoing risks from tariffs and global conditions.
- The Committee reaffirmed its data-dependent and risk-aware approach to future policy decisions. Officials stated they are prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede progress toward the Fed’s goals.
- As previously outlined, the Committee continues the measured run-off of its securities holdings. The pace of balance sheet reduction, which slowed since April (monthly redemption cap on Treasury securities reduced from $25B to $5B, while holding agency MBS cap steady at $35B), was left unchanged this month to support orderly market functioning and financial conditions.
- The next meeting is scheduled for 16 to 17 September 2025.
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
Core PPI m/m (12:30 pm GMT)
PPI m/m (12:30 pm GMT)
What can we expect from Gold today?
Gold’s historic rally to new record highs above $3,670 per ounce reflects a powerful convergence of fundamental drivers that show little sign of abating. Federal Reserve rate cut expectations, U.S. dollar weakness, sustained central bank buying, and persistent geopolitical tensions have created an exceptionally favorable environment for precious metals. With major institutions forecasting continued gains toward $3,700-$4,000 levels, gold appears positioned to extend its remarkable 2025 performance as investors seek refuge from economic uncertainty and currency debasement concerns.
Next 24 Hours Bias
Strong Bullish
The Australian Dollar (AUD)
Key news events today
No major news event
What can we expect from AUD today?
The Australian Dollar faces a complex environment on September 10, 2025. While domestic economic data shows resilience with strong GDP growth and improving business conditions, consumer sentiment has retreated from recent highs amid concerns about the economic outlook. The currency is primarily benefiting from US dollar weakness as Fed rate cut expectations intensify following disappointing US jobs data.
Central Bank Notes:
- The RBA held its cash rate steady at 3.60% at its September meeting on 8–9 September 2025, following a 25 basis point reduction at the August meeting. This maintains a cautious yet supportive stance, with the decision largely anticipated given recent evidence of inflation settling within the target band.
- Inflation readings continue to ease, with headline CPI most likely tracking near 2.1–2.3%—comfortably within the 2–3% target range. September quarter figures are pending, but leading indicators show further moderation in non-housing components, even as insurance and housing-related costs remain sticky.
- The RBA’s preferred trimmed mean inflation is estimated at around 2.7%–2.9%, further reflecting progress toward the midpoint of the target range. Energy and food volatility still create some short-term uncertainty, but underlying inflation is broadly on track.
- Global conditions are a key source of risk. While U.S.–EU trade tensions have stabilized slightly, volatility in equities and commodities persists, with uncertainty feeding through to Australia’s trade and export outlook.
- Domestic demand shows tentative improvement. Real household incomes and a stabilizing housing sector have underpinned modest consumption growth, though business investment remains uneven—service sectors outperforming manufacturing and construction.
- Labour market tightness persists, but momentum continues to slow from earlier in the year. Employment gains remain, but job vacancies and hiring intentions have softened, with underutilization rising marginally for the second straight month.
- Wage growth has slowed in line with easing labour pressures, but unit labour costs remain elevated due to weak productivity. The RBA continues to flag subdued productivity as a medium-term cost risk.
- Forward indicators suggest household consumption may be softer than previously forecast. Elevated rents and high borrowing costs are dampening discretionary spending, despite modest income recovery.
- The Board continues to highlight the risk that household spending could underperform, potentially weighing on business investment and job creation if confidence remains subdued.
- Monetary policy remains mildly restrictive, in line with greater inflation control and ongoing economic rebalancing. The decision to hold rates recognizes both progress and ongoing uncertainties, with future moves explicitly tied to incoming data.
- The Reserve Bank reinforced its goals of price stability and full employment, stating readiness to adjust policy if economic or inflation outcomes diverge from baseline projections.
- The next meeting is on 29 to 30 September 2025.
Next 24 Hours Bias
Weak Bullish
The Kiwi Dollar (NZD)
Key news events today
RBNZ Gov Hawkesby speaks (11:15 pm GMT)
What can we expect from NZD today?
The New Zealand Dollar has experienced a notable recovery in early September 2025, driven primarily by US Dollar weakness following disappointing employment data and supportive Chinese trade figures. While the currency has reached three-week highs around 0.5940, domestic economic challenges, including RBNZ dovish policy, weak GDP growth, and rising unemployment, continue to limit substantial upside potential. The NZD’s near-term trajectory will largely depend on global risk sentiment, Fed policy decisions, and China’s economic performance, with technical resistance around 0.60 serving as a key level to watch.
Central Bank Notes:
- The Monetary Policy Committee (MPC) agreed to cut the Official Cash Rate (OCR) by 25 basis points to 3.00% on 20 August 2025, marking a three-year low and continuing the easing cycle after July’s pause. The vote was split 4-2, with two members advocating a 50-basis-point cut, highlighting diverging views within the Committee.
- Policymakers indicated that significant uncertainty and a stalling economic recovery prompted this move, leaving the door open for further rate cuts later in the year, with a possible trough around 2.5% by December.
- Annual consumer price index inflation rose to 2.7% in the June quarter and is expected to reach 3% for the September quarter—at the upper end of the MPC’s 1 to 3% target band—but medium-term expectations remain anchored near the 2% midpoint..
- Despite the near-term uptick, headline inflation is projected to return toward 2% by mid-2026, as tradables inflation pressures ease and significant spare capacity continues to dampen domestic price momentum.
- Domestic financial conditions are broadly aligning with MPC expectations, as lower wholesale rates have translated into reduced borrowing costs for households. However, declining consumption and investment demand, higher unemployment, and subdued wage growth reflect ongoing economic slack.
- GDP growth stalled in the second quarter of 2025, contrasting with earlier projections. High-frequency indicators point to continued weakness driven by rising prices for essentials, weakening household savings, and constrained business lending.
- The MPC cautioned that ongoing global tariff uncertainties and policy shifts, especially recent changes in US trade regulations, could amplify market volatility and present both upside and downside risks to New Zealand’s recovery.
- Subject to medium-term inflation pressures continuing to ease as projected, the MPC signaled scope for further OCR cuts, possibly down to 2.5% by year-end, consistent with the latest Monetary Policy Statement outlook.
● The next meeting is on 22 October 2025.
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
Key news events today
No major news event
What can we expect from JPY today?
The Japanese Yen faces a complex environment on September 10, 2025, balancing political uncertainty against supportive economic fundamentals. While Prime Minister Ishiba’s resignation initially weakened the currency, stronger GDP data and potential BoJ rate hikes provide underlying support. The yen’s trajectory will likely depend on the outcome of the October LDP leadership election, Federal Reserve policy decisions, and how effectively Japan’s new leader can stabilize the political situation. Current trading around 147.3 per dollar reflects this uncertain but potentially strengthening outlook for the Japanese currency.
Central Bank Notes:
- The Policy Board of the Bank of Japan decided on 31 July, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
- The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
- The BOJ will maintain its gradual reduction of monthly outright purchases of Japanese Government Bonds (JGBs). The scheduled amount of long-term government bond purchases will, in principle, continue to decrease by about ¥400 billion each quarter from January to March 2026, and by about ¥200 billion each quarter from April to June 2026 onward, targeting a purchase level near ¥2 trillion in January to March 2027.
- Japan’s economy is experiencing a moderate recovery overall, though some sectors remain sluggish. Overseas economies are generally growing moderately, but recent trade policies in major economies have introduced pockets of weakness. Exports and industrial production in Japan are essentially flat, with any uptick largely driven by front-loaded demand ahead of U.S. tariff increases.
- On the price front, the year-on-year rate of change in consumer prices (excluding fresh food) remains in the mid-3% range. This reflects continued wage pass-through, previous import cost surges, and further increases in food prices, particularly rice. Expectations for future inflation have begun to rise moderately.
- The effects of the earlier import price and food cost increases are expected to fade during the outlook period. There may be a temporary stagnation in core inflation as overall growth momentum softens.
- Looking forward, the economy is likely to see a slower growth pace in the near term as overseas economies feel the pinch of ongoing global trade policies, putting downward pressure on Japanese corporate profits. Accommodative financial conditions are expected to buffer these headwinds somewhat. In the medium term, as global growth recovers, Japan’s growth rate is also expected to improve.
- With renewed economic expansion, intensifying labor shortages, and a steady rise in medium- to long-term expected inflation rates, core inflation is projected to gradually pick up. By the latter half of the BOJ’s projection period, inflation is forecast to move in line with the 2% price stability target.
- There are multiple risks to the outlook, with especially elevated uncertainty regarding the future path of global trade policies and overseas price trends. The BOJ will continue to closely monitor their impact on financial and foreign exchange markets, as well as on Japan’s economy and inflation.
- The next meeting is scheduled for 17 to 18 September 2025.
Next 24 Hours Bias
Medium Bearish
Oil
Key news events today
EIA crude oil inventories ( 2:30 pm GMT)
What can we expect from Oil today?
The oil market on September 10, 2025, presents a complex picture of competing forces. While geopolitical tensions from Israel’s Qatar strike and potential Russian sanctions provide near-term price support, fundamental factors point toward continued weakness. OPEC+’s modest production increase signals recognition of demand concerns, but the group’s commitment to unwinding cuts ahead of schedule suggests confidence in market absorption capacity.
Next 24 Hours Bias
Medium Bearish
