IC Markets – Europe Fundamental Forecast | 10 November 2025

IC Markets – Europe Fundamental Forecast | 10 November 2025

What happened in the Asia session?
Today’s Asia session was marked by a mild upside surprise in Chinese inflation, BOJ rate hike discussions driving safe-haven JPY demand, and selective rebounds in Asian equities amid ongoing global growth uncertainties. U.S. government shutdown negotiations, major earnings releases, and divergence in monetary policy, especially between Australia and New Zealand, influenced FX and commodities sharply. This environment produced volatility in USD/JPY, AUD/NZD, Asian stock indexes, and commodities.

What does it mean for the Europe & US sessions?
Today’s Asia session was marked by a mild upside surprise in Chinese inflation, BOJ rate hike discussions driving safe-haven JPY demand, and selective rebounds in Asian equities amid ongoing global growth uncertainties. U.S. government shutdown negotiations, major earnings releases, and divergence in monetary policy, especially between Australia and New Zealand, influenced FX and commodities sharply. This environment produced volatility in USD/JPY, AUD/NZD, Asian stock indexes, and commodities.

The Dollar Index (DXY)

Key news events today

No major news event

What can we expect from DXY today?

The Dollar is steady but facing mixed signals: growth concerns and political risk keep it bid, but relief in the shutdown or new data could change direction quickly this week. If the government shutdown ends soon, markets expect renewed focus on inflation and producer price index figures, which could move the Dollar sharply depending on the results.​A protracted shutdown will likely keep the Dollar steady but prone to choppy, indecisive trading until new data is available.​Fed officials remain cautious about cutting rates further, despite ongoing inflation above target, which prevents aggressive Dollar weakening for now.

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 lower than expected at 3.0% year-over-year, easing inflation pressure but still warranting vigilance given 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 reflects an anticipated unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections holding 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, with Treasury redemption caps held steady at $5 billion per month and agency mortgage-backed securities caps at $35 billion.
• The next meeting is scheduled for 9 to 10 December 2025.

Next 24 Hours Bias
Weak Bullish

Gold (XAU)

Key news events today

No major news event

What can we expect from Gold today?

Gold prices are stabilizing after a period of volatility, currently trading near $4,010–$4,050 per ounce, with the market closely watching U.S. economic developments and upcoming key macroeconomic data. The yellow metal has moved into a corrective phase after a record rally, influenced by profit-taking, a slightly stronger U.S. dollar, and continued speculation on potential Federal Reserve rate cuts in December.

Next 24 Hours Bias   
Medium Bullish

The Euro (EUR)

Key news events today

No major news event

What can we expect from EUR today?

The euro opened the week somewhat weaker as global markets reacted to ongoing uncertainties and awaited key economic data out of the Eurozone. Market participants are closely watching the incoming data for clues on future growth and monetary policy trends, which will likely determine the next major moves in the euro’s exchange rate. The Euro slipped 0.1% to around $1.155 at the open of Asian trading, reflecting a weaker posture compared to recent sessions.

Central Bank Notes:

• The Governing Council of the ECB kept the three key interest rates unchanged at its 30 October 2025 meeting. The main refinancing rate remains at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. This decision reflects policymakers’ assessment that the current monetary stance remains consistent with medium-term price stability, while incoming data confirm a gradual return of inflation towards the target.
• Recent indicators point to stable price dynamics. Headline inflation remains near the 2% mark, with energy prices contained and food inflation easing slightly after earlier supply bottlenecks. Wage growth continues to moderate, contributing to the slowdown in domestic cost pressures. The ECB reiterated its commitment to a data-driven, meeting-by-meeting approach and emphasized flexibility amid uncertain global financial conditions.
• Eurosystem staff projections have not been materially altered since September. Headline inflation averages remain at 2.0% for 2025, 1.8% for 2026, and 2.0% for 2027. Recent softening in producer prices and subdued pipeline pressures suggest limited upside risks to inflation, though geopolitical tensions and potential commodity shocks continue to pose uncertainties to the outlook.
• Euro area GDP growth remains on track with earlier forecasts, projected at 1.1% for 2025, 1.1% for 2026, and 1.4% for 2027. Forward-looking indicators, including PMIs and industrial sentiment surveys, signal some stabilization in activity following weakness in the third quarter. Public investment and recovering export activity are expected to offset softer private sector demand in the near term.
• The labor market remains resilient, with unemployment rates at multi-decade lows and participation rates strong. Real income growth continues to support household spending, even as consumption growth normalizes from earlier highs. Financing conditions remain favorable, aided by stable banking sector liquidity and improved credit demand among small and medium-sized firms.
• Business sentiment remains mixed, reflecting lingering uncertainty over global trade policy and the path of US tariffs. However, easing supply chain costs and improved export competitiveness due to softer exchange rates are providing some relief to manufacturing and external-oriented sectors.
• The Governing Council reaffirmed that future decisions will depend on an integrated assessment of incoming data—covering inflation trends, financial conditions, and the state of policy transmission. The Council emphasized that no pre-set path for rates exists; keeping all options open should the economic outlook shift markedly.
• Balance sheet reduction continues smoothly, with holdings under the APP and PEPP declining as reinvestments have ceased. The ECB confirmed that the pace of portfolio runoff remains in line with its previously communicated normalization plan, supporting a gradual withdrawal of monetary accommodation in a predictable manner.
• The next meeting is on 17 to 18 December 2025

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 remains exceptionally strong in early November 2025, supported by safe-haven demand amid global uncertainties. Key developments include promising progress in US tariff negotiations following high-level business meetings with President Trump, though a final deal depends on the US president’s decision. Switzerland’s economic outlook has deteriorated, with GDP growth forecasts slashed to 0.9% for 2026 due to tariff impacts, while Q2 growth slowed to just 0.1%. Inflation has fallen to 0.1%, sparking rate cut speculation, but SNB policymakers signal comfort with current 0% rates ahead of the December 11 meeting.

Central Bank Notes:

• The SNB maintained its key policy rate at 0% during its meeting on 25 September 2025, pausing a sequence of six consecutive rate cuts as inflation stabilized and the Swiss franc remained firm.
• Recent data showed a modest rebound in inflation, with Swiss consumer prices rising 0.2% year-on-year in August after staying above zero for three consecutive months; this helped alleviate fears of deflation that were mounting earlier in the year.
• The conditional inflation forecast remains broadly unchanged from June: headline inflation is expected to average 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027. The risk of a negative rate move has diminished for now, but the SNB retains flexibility should inflationary pressures weaken again.
• The global economic outlook has deteriorated further, weighed down by heightened trade tensions—especially with the U.S.—and ongoing uncertainty in key Swiss export markets.
• Swiss GDP growth moderated in Q2 after a strong Q1 boosted by front-loaded U.S. exports. The SNB expects growth to slow and remain subdued, with forecasted GDP expansion between 1% and 1.5% in both 2025 and 2026.
• Labor market sentiment in the Swiss industrial sector has softened on concerns over export competitiveness and potential adjustments to production, but the overall growth outlook stays broadly unchanged
• The SNB reiterated its readiness to respond as needed if deflation risks re-emerge, emphasizing its commitment to medium-term price stability and a robust, transparent communication policy, with the introduction of more detailed monetary policy minutes beginning in October.
• The next meeting is on 11 December 2025.

Next 24 Hours Bias
Medium Bearish

The Pound (GBP)

Key news events today

No major news event

What can we expect from GBP today?

The British pound opened Monday’s session near seven-month lows around 1.3150 against the US dollar, pressured by renewed dollar strength as the US government shutdown nears resolution. Last week’s Bank of England decision, which saw four of nine members vote for an immediate rate cut, has reinforced expectations for December easing, with markets pricing in 66% odds of a 25bp cut. Key factors weighing on sterling include the unemployment rate reaching a four-year high of 4.8%, ongoing fiscal concerns ahead of the November 26 Budget, where tax increases totaling £20-35 billion may be needed

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) met on 6 November 2025 and voted by a majority of 7–2 to keep the Bank Rate unchanged at 4.00 percent for a second consecutive meeting. The decision reflects the Committee’s cautious approach as inflation remains above target, but underlying economic momentum continues to weaken. Two members maintained their vote for a 25-basis-point cut, citing further signs of labor market softening and weak business sentiment.
• The BOE adjusted its guidance on quantitative tightening (QT), maintaining the reduced pace established in September. The planned reduction of UK government bond holdings remains at £67.5 billion over the next 12 months, leaving the current gilt balance near £550 billion. Policymakers described the recalibrated QT path as “appropriate for current market conditions,” emphasizing the importance of liquidity management amid heightened volatility.
• Headline inflation moderated slightly to 3.6 percent in October from 3.8 percent previously, driven by easing food and transport prices. However, core inflation has shown only gradual progress, holding near 3.9 percent. The MPC noted that services inflation and administered energy costs continue to exert pressure, highlighting the challenge of achieving the 2 percent target sustainably. The Committee’s latest projections see inflation falling toward 3 percent by mid-2026, with further downside expected if energy and wage dynamics continue to normalize.
• Economic activity remains subdued. Estimates place Q3 GDP growth close to zero, with both business output and consumer spending restrained. The unemployment rate has edged up to 4.8 percent, while pay growth cooled to just under 5 percent year-on-year. MPC members acknowledged that pay settlements are weakening further, signaling an easing in labor cost pressures as demand softens. Surveys from the manufacturing and services sectors suggest muted hiring intentions through year-end.
• International factors continue to complicate the policy outlook. Fluctuating oil prices—partly linked to renewed Middle East tensions—alongside fragile global demand have contributed to higher market volatility. The MPC reiterated that external shocks, including global food and energy disruptions, could temporarily slow the disinflation path but remain unlikely to derail the medium-term moderation in prices.
• The Committee assessed risks around inflation as balanced. Downside risks arise from sluggish domestic growth and declining real income momentum, while upside risks remain tied to elevated inflation expectations and stubborn services inflation. Policymakers emphasized the need for patience, maintaining that any rate cuts ahead of clear inflation progress could undermine confidence in policy credibility.
• The MPC’s overall stance remains restrictive but increasingly balanced, with future moves expected to follow a cautious, data-driven trajectory. The Committee reaffirmed that monetary policy will stay tight until there is compelling evidence that inflation is returning to the 2 percent target on a durable basis.
• The next meeting is on 18 December 2025.
  
  Next 24 Hours Bias
  Weak Bullish 

The Canadian Dollar (CAD)

Key news events today

No major news event

What can we expect from CAD today?

The Canadian dollar faces multiple headwinds as it enters the week of November 10, 2025, with USD/CAD consolidating near 1.40 after reaching seven-month highs. The 150+ basis point interest rate differential favoring the US dollar remains the dominant driver, reinforced by the Bank of Canada’s signal that it has likely finished its easing cycle at 2.25%. Strong October employment data—adding 66,600 jobs and pushing unemployment down to 6.9%—has solidified expectations for a prolonged BoC rate pause.

Central Bank Notes:

• The Council noted that U.S. tariff tensions have eased slightly following early progress in bilateral discussions, though the external trade environment remains fragile. Businesses continue to hold back on long-term investment, with the Bank highlighting that sustained clarity on U.S. trade policy is needed to restore confidence.
• The Bank acknowledged that uncertainty persists despite the softer U.S. tone, as incoming data show limited improvement in export orders. The manufacturing sector has stabilized but remains below pre-2024 output levels, reflecting weak global demand and cautious corporate spending.
• Canada’s economy showed tentative signs of recovery in early Q4, with GDP estimated to expand by 0.3% in October after two quarters of contraction. Mining and energy activity strengthened modestly, aided by steady crude demand, while goods exports posted a fractional gain.
• Service sector growth remained uneven, supported mainly by tourism-related and technology services. However, retail spending and household consumption were subdued, constrained by slower job creation and lingering consumer caution. The Bank judged overall momentum as fragile but improving marginally.
• Housing activity showed modest reacceleration in major urban markets as mortgage rates stabilized near record lows. Nonetheless, affordability pressures and stricter lending standards continue to cap overall resale volumes, leading to only a gradual recovery in the housing sector.
• Headline CPI inflation rose to 2.1% in October, reaching the Bank’s target for the first time in six months. Higher energy prices and a modest uptick in food and shelter costs drove the increase. Core inflation measures remained stable, suggesting underlying price pressures are contained.
• The Governing Council reiterated its data-dependent stance, indicating that the current policy rate remains appropriate amid tentative growth and balanced inflation risks. Officials noted that while additional stimulus is not ruled out, the emphasis has shifted toward monitoring the sustainability of the recovery rather than immediate rate adjustments.
• The next meeting is on 17 to 18 December 2025.

Next 24 Hours Bias
Medium Bullish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Monday’s oil market opened with modest gains driven primarily by optimism over the pending U.S. government shutdown resolution, which is expected to restore consumer spending and economic activity. However, significant bearish headwinds persist: Saudi Arabia’s aggressive price cuts to Asia signal weak demand and intense competition for market share; U.S. crude inventories posted their largest weekly build since July; and the global market faces a looming supply glut in 2026 as production growth dramatically outpaces sluggish demand.

Next 24 Hours Bias
Medium Bearish