IC Markets Asia Fundamental Forecast | 15 September 2025
What happened in the U.S. session?
The U.S. overnight session was characterized by mixed inflationary signals that reinforced Fed easing expectations while maintaining caution about the pace of cuts. The August CPI’s 0.4% monthly rise exceeded expectations but was offset by deteriorating labor market conditions, creating a complex environment for policymakers.
What does it mean for the Asia Session?
Asian traders should prepare for a potentially volatile but opportunity-rich session driven primarily by Fed rate cut expectations. The anticipated dollar weakness creates favorable conditions for Asian assets, while divergent regional central bank policies offer tactical trading opportunities. Key focus areas include Japanese trade data, currency positioning ahead of the Fed meeting, and continued monitoring of China’s economic trajectory. Geopolitical developments remain a wildcard that could override fundamental factors, particularly in commodity markets.
The Dollar Index (DXY)
Key news events today
Empire State Manufacturing Index (12:30 pm GMT)
What can we expect from DXY today?
The US Dollar enters the week of September 16, 2025, facing its most significant policy inflection point since late 2024. With the Fed widely expected to begin its easing cycle amid clear labor market deterioration, the dollar confronts both cyclical and structural headwinds. Technical indicators suggest further weakness ahead, with key support levels now in focus. While short-term positioning has stabilized, the fundamental backdrop of diverging global monetary policies and domestic political pressures points to continued dollar vulnerability in the near term.
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
Weak Bearish
Gold (XAU)
Key news events today
Empire State Manufacturing Index (12:30 pm GMT)
What can we expect from Gold today?
Gold enters Monday, September 15, 2025, in a strong fundamental position, supported by imminent Federal Reserve rate cuts, robust central bank demand, and ongoing geopolitical uncertainties. The combination of technical momentum near record highs and favorable macroeconomic conditions suggests continued bullish sentiment, with key resistance at $3,675 representing the next major hurdle. China’s regulatory streamlining adds another positive catalyst for medium-term demand, while the Fed’s decision on Wednesday will likely determine whether gold can sustain its breakout to new all-time highs above $3,700.
Next 24 Hours Bias
Strong Bullish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The Australian Dollar is experiencing its strongest period in nearly a year, driven primarily by expectations of aggressive Federal Reserve easing rather than purely domestic factors. While technical indicators suggest continued upward momentum, the currency faces potential headwinds from China’s economic challenges and upcoming domestic employment data. The RBA’s September meeting is expected to maintain the status quo, with officials taking a data-dependent approach to future policy decisions.
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.
- Labor 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
Medium Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The New Zealand Dollar remains under pressure from dovish domestic monetary policy, with the RBNZ signaling further rate cuts to support the struggling economy. While global factors such as US Dollar weakness and positive China trade data have provided some support, the fundamental outlook for New Zealand continues to show economic weakness with declining GDP, rising unemployment, and contracting manufacturing activity. The currency’s trajectory will largely depend on the pace of the RBNZ’s easing cycle and broader global monetary policy developments, particularly from the Federal Reserve. Market participants should monitor upcoming GDP data and employment figures, which will be critical in determining whether the central bank delivers the expected additional 50 basis points of cuts by year-end.
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 events.
What can we expect from JPY today?
The Japanese yen faces a complex environment on September 15, 2025, with political uncertainty from Prime Minister Ishiba’s resignation creating short-term headwinds despite improving economic fundamentals. Manufacturing sentiment has reached three-year highs following the US-Japan tariff deal, and business confidence is turning positive across major firms. However, the upcoming BoJ meeting on September 18-19 will be crucial for determining the central bank’s policy direction amid persistent inflation above the 2% target and ongoing global trade uncertainties.
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.
- The next meeting is scheduled for 17 to 18 September 2025.
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
Oil markets on Monday, September 15, 2025, face a challenging outlook characterized by modest OPEC+ production increases aimed at market share recovery, robust supply growth outpacing demand, and mixed inventory signals. While geopolitical tensions continue to provide price support, the underlying fundamentals suggest potential for further price weakness as anticipated supply surpluses materialize in 2026.
Next 24 Hours Bias
Medium Bullish
