IC Markets Europe Fundamental Forecast | 30 July 2025
What happened in the Asia session?
The Australian dollar dropped on a CPI miss, the Japanese Nikkei declined on weak retail data and BOJ caution, tech shares traded positively, while Hong Kong and China equities moved lower. Defensive positioning persists ahead of the Fed and BOJ meetings, amid global trade policy uncertainty and anticipation of significant economic data and earnings releases.
Market focus remains on the near-term U.S. rate path, the sustainability of the U.S.–China tariff truce, and signs of growth stabilization or policy easing in the Asia-Pacific region. Overall, Asian markets are treading water, reacting more to policy and macro headlines than to individual data points, as risk events accumulate on the calendar and volatility could rise in the next 24–48 hours.
What does it mean for the Europe & US sessions?
Markets are entering the European and U.S. sessions with a cautious tone. The details of the U.S.–EU trade agreement are weighing on the euro and European stocks while supporting the dollar. U.S. equities are consolidating near their highs but face potential tests with the upcoming Federal Reserve decision and a wave of major earnings reports. Oil remains sensitive to global headlines, while gold stays steady as inflation and trade risks sustain demand. Traders should remain alert to significant headline risks from central banks, trade negotiations, and earnings in the coming hours.
The Dollar Index (DXY)
Key news events today
ADP non-farm employment change (12:15 pm GMT)
Advance GDP (12:30 pm GMT)
Pending home sales (2:00 pm GMT)
Federal funds rate (6:00 pm GMT)
FOMC statement (6:00 pm GMT)
FOMC press conference (6:30 pm GMT)
What can we expect from DXY today?
The U.S. dollar is exhibiting a strong bullish trend today, supported by gains in trade policy, positive economic data, and increased global capital flows ahead of the upcoming Fed decision. Market participants should closely watch for any shift in the Fed’s tone, which could serve as the next key catalyst for the dollar’s direction. The U.S. Dollar Index (DXY) has extended its rally, trading above 98.8 after a 1% surge at the start of the week. This momentum positions the dollar for its strongest week of the year so far, bolstered by recent U.S. trade agreements, including a 15% tariff on EU imports, which have strengthened the U.S. economy while pressuring the euro.
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% on 18 June 2025.
- The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run; uncertainty around the economic outlook has diminished but remains elevated.
- The Committee is attentive to the risks to both sides of its dual mandate and judges that the unemployment rate remains low, labour market conditions remain solid, but inflation is somewhat elevated.
- Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace.
- GDP growth forecasts were revised downward for 2025 (1.4% vs. 1.7% in the March projection) while PCE inflation projections have been adjusted higher for 2025, with core inflation expected to reach 3.1% (vs. 2.8% in the March projection), partly due to tariff-related pressures.
- In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
- Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
- The next meeting is scheduled for 29 to 30 July 2025.
Next 24 Hours Bias
Weak Bearish
Gold (XAU)
Key news events today
ADP non-farm employment change (12:15 pm GMT)
Advance GDP (12:30 pm GMT)
Pending home sales (2:00 pm GMT)
Federal funds rate (6:00 pm GMT)
FOMC statement (6:00 pm GMT)
FOMC press conference (6:30 pm GMT)
What can we expect from Gold today?
Gold is trading slightly higher early Wednesday, recovering from three-week lows as risk sentiment turns cautious and traders await clarity from the U.S. Federal Reserve meeting. For now, the yellow metal remains in a consolidation phase, with its direction hinging on upcoming policy decisions and economic headlines. Gold prices are currently around $3,327 per ounce, marking a modest 0.39% gain from the previous day. The precious metal remains within its recent range, holding above the key $3,300 support level despite ongoing market uncertainty.
Next 24 Hours Bias
Weak Bearish
The Australian Dollar (AUD)
Key news events today
CPI q/q (1:30 am GMT)
CPI y/y (1:30 am GMT)
Trimmed mean CPI q/q (1:30 am GMT)
What can we expect from AUD today?
The Australian Dollar remains weak and range-bound above 0.6500, with global risk sentiment, a firm US Dollar, and upcoming domestic inflation data and rate decisions shaping market tone. The outcome of Wednesday’s CPI report and the RBA’s response next week will be decisive for AUD direction in the near term. Key risks include trade headlines, signals from the Federal Reserve, and ongoing volatility in global equity and commodity markets, particularly as China–U.S. negotiations continue.
Central Bank Notes:
- The RBA held its cash rate steady at 3.85% at the July meeting on 8 July 2025, following a 25bps reduction in May and line with widespread market expectations after recent data showed inflation tracking within the target band.
- Inflation continues to ease from its peak, with higher interest rates helping to rebalance demand and supply across the Australian economy. Data for the June quarter signalled ongoing progress, though underlying pressures persist in certain sectors.
- Trimmed mean inflation for the June quarter likely remained near 2.9% and headline CPI around 2.4%, both within the RBA’s 2–3% target range. The Board noted further evidence of inflation convergence, but flagged that not all price categories are moving in tandem.
- Financial markets have shown increased volatility in the wake of global tariff and trade policy developments—especially as a result of recent U.S. and EU announcements. This has pushed asset prices higher but contributed to an uncertain outlook for domestic growth and employment.
- Private domestic demand showed a tentative recovery. Real household incomes improved and signs of easing household financial stress emerged, but some business sectors continued to face subdued demand, limiting their ability to pass on cost increases.
- Labour market conditions remained tight overall. Employment continued to expand, with low rates of underutilisation. Business surveys suggest labour availability remains a constraint, though there are signs of a gradual easing compared to earlier in 2025.
- Underlying wage growth softened modestly, though unit labour cost growth remains elevated due to below-trend productivity gains. The Board remains attentive to developments in wage and productivity dynamics as cost pressures continue to evolve.
- Uncertainties persist for both domestic activity and inflation. Consumption growth has risen, but more slowly than anticipated three months ago, with global and domestic factors both contributing to the cautious outlook.
- There remains a risk that household spending picks up more slowly than forecast, which could result in ongoing subdued aggregate demand and a sharper deterioration in employment conditions.
- Given that inflation is expected to remain around the target band, the Board judged that it was appropriate to keep policy settings unchanged in July, maintaining a position that is still mildly restrictive.
- The Board continues to monitor all incoming data and assesses risks carefully, with a focus on global trends, domestic demand indicators, inflation outcomes, and the labour market outlook.
- The RBA remains committed to its mandate of price stability and full employment and stands ready to adjust policy as needed to achieve these objectives.
- The next meeting is on August 11–12 2025.
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from NZD today?
The NZD remains weak today, driven by a stronger US dollar, uncertainty surrounding future US tariff policies, and a risk-off sentiment in global markets. With no major domestic news, the outlook depends largely on international developments and central bank signals over the next 24–48 hours.
The New Zealand dollar (NZD/USD) continued its decline, trading around 0.595–0.596 near a one-week low and extending its losing streak to a fourth consecutive session. Over the past month, the NZD has lost about 2.2% in value, reflecting broad weakness against a stronger US dollar, and it is down approximately 0.87% over the past seven days.
Central Bank Notes:
- The Monetary Policy Committee (MPC) agreed to hold the Official Cash Rate (OCR) at 3.25% on 9 July, marking the first pause following six consecutive rate cuts.
- The MPC cited heightened uncertainty and near-term inflation risks as reasons to wait until August for further action.
- Although the annual consumer price index inflation increased to 2.5% in the first quarter of 2025, it remained within the MPC’s target range of 1 to 3%, noting that the outlook for medium-term inflation pressures has evolved broadly in line with the May MPS projections.
- While it is expected to be near the upper end of the band in the second and third quarters of this year, easing core inflation and spare capacity in the economy should help return it toward the 2% midpoint over time.
- The MPC noted that, despite global factors, domestic financial conditions are evolving broadly as expected, as mortgage and deposit interest rates have continued to decline, reflecting a lower OCR, strong bank liquidity, and soft credit growth.
- In aggregate, GDP growth over the December and March quarters was stronger than expected, reflecting a pick-up in household consumption and business investment, but higher frequency indicators suggest weaker than expected growth in April and May.
- Large economic policy shifts overseas and concerns about sovereign risk could result in additional financial market volatility and increased bond yields, while prolonged economic uncertainty might induce further precautionary behaviour by households and firms, slowing the domestic economic recovery.
- Subject to medium-term inflation pressures continuing to ease in line with the Committee’s central projections, the Committee expects to lower the OCR further, broadly consistent with the projection outlined in May.
The next meeting is on 20 August 2025.
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY)
Key news events today
No major news event
What can we expect from JPY today?
The Japanese yen is trading near multi-session lows, weighed down by external trade dynamics and defensive positioning ahead of the Bank of Japan’s upcoming policy meeting. While markets expect cautious policy signals and an upward revision to the inflation forecast, any unexpected guidance or political developments could trigger volatility in both the yen and Japanese assets over the next 24–48 hours.
Currently, the yen (JPY) is hovering around 148.3–148.5 per U.S. dollar after a sharp three-session decline. The currency is down approximately 3.2% for the month but held relatively steady overnight as traders await central bank decisions and key international developments.
Central Bank Notes:
- The Policy Board of the Bank of Japan decided on 17 June, 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 Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs. The scheduled amount of monthly long-term government bond purchases will, in principle, be reduced by about ¥400 billion each quarter from January to March 2026, and by about ¥200 billion each quarter from April to June 2026 onward, aiming for a level of around ¥2 trillion in January to March 2027.
- Japan’s economy, while showing some weak movements in certain areas, is recovering moderately. Overseas economies, though partly exhibiting weakness due to the effects of various countries’ trade policies, are generally growing at a moderate pace. Exports and industrial production, while showing some last-minute demand due to the U.S. tariff increases, are basically moving sideways.
- On the price front, looking at the year-on-year rate of change in consumer prices (excluding fresh food), the rate is currently in the mid-3% range, reflecting continued pass-through of wage increases to sales prices, as well as the effects of past rises in import prices and recent increases in food prices such as rice. Expected inflation rates are rising moderately.
- As for consumer prices (excluding fresh food), the effects of past import price increases and recent rises in food prices such as rice, which have pushed up inflation so far, are expected to wane. During this period, the underlying rate of increase in consumer prices may stagnate somewhat due to the slowdown in growth pace.
- Looking ahead, the Japanese economy is expected to slow its growth pace, as overseas economies decelerate due to the effects of various countries’ trade policies, putting downward pressure on Japanese corporate profits, etc., although accommodative financial conditions will provide some support. Thereafter, as overseas economies return to a moderate growth path, Japan’s growth rate is expected to increase.
- As the growth rate rises, labour shortages intensify, and medium- to long-term expected inflation rates rise, inflation is expected to gradually increase. In the latter half of the projection period in the “Outlook Report,” inflation is expected to move at a level generally consistent with the “price stability target”.
- There are various risk factors, but in particular, the outlook for the development of trade policies in various countries and the resulting uncertainty regarding overseas economic and price trends is extremely high. It is necessary to closely monitor the impact on financial and foreign exchange markets, as well as on Japan’s economy and prices.
- The next meeting is scheduled for 31 July 2025.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
Spanish flash CPI (7:00 am GMT)
German prelim GDP (8:00 am GMT)
What can we expect from EUR today?
Today, the euro remains under selling pressure, driven by investor disappointment over the U.S.–EU trade agreement, muted regional data, and caution ahead of the Federal Reserve’s decision. The currency is expected to stay sensitive to macroeconomic headlines and central bank policies as the session unfolds. The euro remains weak and is likely to stay volatile amid export headwinds from U.S. tariffs, a cautious ECB stance, and cooling sentiment ahead of key economic data and a major Fed announcement.
Central Bank Notes:
- The Governing Council kept the three key ECB interest rates unchanged at its July 24 meeting, maintaining the main refinancing rate at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%, following eight consecutive cuts preceding this decision.
- The decision to hold rates steady was driven by evidence that inflation is stabilizing near the Governing Council’s medium-term target of 2%. Policymakers communicated that further moves on rates would be data-dependent, explicitly refraining from pre-committing to any future path amid persistent global and domestic uncertainties.
- According to the latest Eurosystem staff projections, headline inflation is expected to remain around 2.0% for 2025, with projections indicating 1.6% for 2026 and a rebound to 2.0% in 2027. Downward revisions from previous forecasts primarily reflect lower energy price assumptions and a stronger euro. Inflation excluding energy and food is seen averaging 2.4% in 2025 and 1.9% in 2026–2027, little changed from prior projections.
- Real GDP growth for the Eurozone is forecast at 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. The projections note that a strong first quarter offsets a weaker outlook for the rest of 2025. While business investment and exports are dampened by ongoing trade policy uncertainties—including recent U.S. tariff measures—rising government investment, particularly in defense and infrastructure, is expected to progressively underpin growth.
- Household spending should be supported by firm real income gains and a still-solid labour market. More favorable financing conditions are expected to help strengthen the economy’s resilience to further global shocks. Wage growth, although still elevated, continues to moderate, with profit margins partially absorbing cost pressures.
- Amid significant geopolitical and economic uncertainty, the Governing Council underscored its commitment to ensuring inflation stabilises sustainably at the 2% target. The ECB reiterated it would pursue a meeting-by-meeting, data-dependent approach to its monetary policy stance.
- Future rate decisions will be guided by the assessment of incoming economic and financial data, the outlook for inflation and underlying inflation dynamics, and the effectiveness of monetary policy transmission. The Council continues to stress that it is not pre-committed to any specific rate trajectory.
- The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are continuing to decline in an orderly and predictable way, as the Eurosystem has ceased reinvesting principal payments from maturing securities.
- The next meeting is on 11 September 2025
Next 24 Hours Bias
Medium Bearish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from CHF today?
The Swiss franc has softened slightly as global risk sentiment improves and the U.S. dollar rebounds on trade news and Fed policy expectations. The SNB’s policy remains steady following its June rate cut, with near-term direction likely influenced by cross-asset risk trends, U.S. monetary developments, and potential renewed safe-haven demand. The franc faces competing forces, its continued safe-haven appeal versus reduced demand amid improving trade relations. While the SNB’s dovish stance and readiness to intervene highlight concerns about franc strength, recent improvements in inflation may limit the need for further aggressive easing.
Central Bank Notes:
- The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.25% to 0% on 19 June 2025, marking the sixth consecutive reduction.
- Inflationary pressure has decreased further as compared to the previous quarter, decreasing from 0.3% in February to -0.1% in May, mainly attributable to lower prices in tourism and oil products.
- Compared to March, the new conditional inflation forecast is lower in the short term. In the medium term, there is hardly any change from March, putting the average annual inflation at 0.2% for 2025, 0.5% for 2026 and 0.7% for 2027.
- The global economy continued to grow at a moderate pace in the first quarter of 2025 but the global economic outlook for the coming quarters has deteriorated due to the increase in trade tensions.
- Swiss GDP growth was strong in the first quarter of 2025, but this development was largely because, as in other countries, exports to the U.S. were brought forward.
- Following the strong first quarter, growth is likely to slow again and remain rather subdued over the remainder of the year; the SNB expects GDP growth of 1% to 1.5% for 2025 as a whole, while also anticipating GDP growth of 1% to 1.5% for 2026.
- The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
- The next meeting is on 25 September 2025.
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
No major news event
What can we expect from GBP today?
The pound remains soft and defensive heading into July 30, 2025, weighed down by slowing growth, persistent inflation, and expectations of BoE rate cuts. GBP/USD is trading near multi-month lows, while GBP/EUR saw a brief rebound but continues to hover near its 2023–2024 lows. Domestic economic weakness and strong U.S. dollar demand keep sterling under pressure.
Markets are positioned cautiously ahead of the August 7 Bank of England meeting, with at least one rate cut priced in. Focus remains on UK growth signals, particularly monthly GDP releases alongside evolving labor market data and shifts in core inflation. GBP volatility continues to track developments in global risk sentiment, U.S. dollar strength, and changes in trade policy outlook.
Central Bank Notes:
- The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to maintain the Bank Rate at 4.25% on 19 June 2025, with three members preferring to reduce the Bank Rate by 25 basis points.
- The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100 billion over the next 12 months to a total of £558 billion, starting in October 2024. On 19 June 2025, the stock of UK government bonds held for monetary policy purposes was £590 billion.
- There has been substantial disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations.
- Twelve-month CPI inflation increased to 3.4% in May from 2.6% in March, in line with expectations in the May Monetary Policy Report. The rise was largely due to a range of regulated prices and previous increases in energy prices.
- Underlying UK GDP growth appears to have remained weak, and the labour market has continued to loosen, leading to clearer signs that a margin of slack has opened up over time.
- Measures of pay growth have continued to moderate and, as in May, the Committee expects a significant slowing over the rest of the year.
- Global uncertainty remains elevated while energy prices have risen owing to an escalation of the conflict in the Middle East, prompting the Committee to remain sensitive to heightened unpredictability in the economic and geopolitical environment.
- There remain two-sided risks to inflation. Given the outlook and continued disinflation, a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate and the Committee will continue to monitor closely the risks of inflation persistence and what the evidence may reveal about the balance between aggregate supply and demand in the economy.
- Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
- The next meeting is on 7 August 2025.
Next 24 Hours Bias
Weak Bearish
The Canadian Dollar (CAD)
Key news events today
BOC monetary policy report (1:45 pm GMT)
BOC rate statement (1:45 pm GMT)
Overnight rate (1:45 pm GMT)
What can we expect from CAD today?
The Canadian dollar enters July 30 under pressure from a strengthening U.S. dollar and ongoing trade uncertainty. With the Bank of Canada widely expected to hold interest rates steady at 2.75%, attention shifts to forward guidance and how policymakers will balance persistent inflation concerns against weak economic growth and external trade risks. Additionally, the Canadian dollar is weighed down by recent U.S. trade agreements with Japan and the EU, which have strengthened the U.S. dollar while leaving Canada without a comparable deal.
Central Bank Notes:
- The Bank of Canada maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% on 4th June – marking the second consecutive meeting where rates were kept on hold.
- The Governing Council noted that the ongoing increase and decrease of various U.S. tariffs, coupled with highly uncertain outcomes of bilateral trade negotiations and tariff rates remaining well above their levels at the beginning of 2025, placed downside risks on growth and lifted inflation expectations, warranting caution regarding the continuation of monetary easing.
- The higher uncertainty stemmed from the absence of a clear tariff path by the U.S. and persistent threats of new trade actions, which prompted the BoC Governing Council to highlight risks such as the extent to which higher US tariffs reduce demand for Canadian exports.
- Canada’s economic growth in the first quarter came in at 2.2%, slightly stronger than the original forecast, while the composition of GDP growth was largely as expected. Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence.
- Housing activity was down, driven by a sharp contraction in resales, while government spending also declined. The economy is expected to be considerably weaker in the second quarter, with the strength in exports and inventories reversing and final domestic demand remaining subdued.
- The labour market has weakened, particularly in trade-intensive sectors, and unemployment has risen to 6.9% while CPI inflation eased to 1.7% in April, as the elimination of the federal consumer carbon tax reduced inflation by 0.6%.
- The Bank’s preferred measures of core inflation, as well as other measures of underlying inflation, moved up, while recent surveys indicate that households continue to expect that tariffs will raise prices and many businesses say they intend to pass on the costs of higher tariffs.
- The Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs while proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
- The Governing Council will focus on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval by supporting economic growth while ensuring that inflation remains well-controlled.
- The next meeting is on 30 July 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?
Oil prices maintained their recent strength on Wednesday, supported by escalating geopolitical tensions following Trump’s Russia ultimatum, optimism surrounding U.S.-EU trade agreements, and a shift in market sentiment toward bullish positioning. The market remains highly sensitive to developments related to the Russia-Ukraine deadline, Federal Reserve policy signals, and upcoming OPEC+ production decisions.
Next 24 Hours Bias
Weak Bullish
