IC Markets Global – Asia Fundamental Forecast | 02 June 2026

IC Markets Global – Asia Fundamental Forecast | 02 June 2026

What happened in the U.S. session?

Oil prices surged approximately 3% to around $90/barrel after Iran’s chief negotiator said there would be no deal with the U.S., reigniting Middle East supply concerns and overshadowing the previous week’s U.S.-Iran ceasefire optimism. Gold futures slipped 2.5% to $4,485/ounce, and Bitcoin dropped over 2% to $71,400 (down from overnight highs above $74,000) as risk-off sentiment dominated crypto and safe-haven metals.

What does it mean for the Asia Session?

Japan’s Nikkei 225 surging past 67,000 (driven by SoftBank overtaking Toyota as Japan’s most valuable firm on AI enthusiasm), China’s new overseas investment rules tightening scrutiny on cross-border tech/data deals, Australia’s Q1 GDP and current account data, Indonesia’s inflation and trade balance, plus key bond auctions (Japan’s 10-year JGB, South Korea’s 30-year KTB) and RBA governor Harper’s speech.

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The Dollar Index (DXY)

Key news events today

JOLTS Job Openings (2:00 pm GMT)

What can we expect from DXY today?

Today’s dollar action is likely driven by Eurozone flash CPI (stronger prints likely boosting the euro), a key speech from BOE Governor Bailey that could alter risk flows, and the US JOLTS report, where a stronger jobs‑openings print would support the dollar by reinforcing a tight US labor market and higher Fed rate expectations. Traders will also watch US Treasury yields and any Fed commentary; if yields climb and JOLTS surprises on the upside, the dollar should strengthen, while softer JOLTS or dovish central bank tones in Europe/UK would weigh on it.

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 next meeting is scheduled for 16 to 17 June 2026.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

JOLTS Job Openings (2:00 pm GMT)

What can we expect from Gold today?

Gold is forecast to decline on Tuesday, trading at approximately $4,455.82 as of June 1, following a 1.48% drop to $4,474.37 per ounce. The precious metal recently hit a two-month low of around $4,375.78 per ounce on May 28–29, driven by heightened U.S. military strikes in Iran, which strengthened the U.S. dollar and increased oil prices, thereby stoking inflation fears and reducing safe-haven demand for gold.

Next 24 Hours Bias
Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news event

What can we expect from AUD today?

The Australian dollar is experiencing a modest short-term decline as it faces conflicting macroeconomic drivers: while the RBA’s higher interest rate (relative to the US) traditionally supports the AUD, the currency is currently being weighed down by weakening commodity prices, particularly iron ore and coking coal, and shifting US Federal Reserve policy expectations.

Central Bank Notes:

• The Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 4.35% at the 5 May 2026 meeting, moving into a more restrictive stance as inflation pressures re‑accelerated and the board judged the previous 4.10% level insufficient to re‑anchor the medium‑term outlook.
• The RBA lifted the cash rate from 4.10% to 4.35% at the 5 May meeting in an 8–1 vote, flagging that the stance is now “more restrictive” and that the Council sees a low but non‑trivial chance of further hikes if inflation risks crystallise.
• Headline CPI has jumped to 4.6% year‑on‑year for the 12 months to March 2026, up from around 3.7% in February, with trimmed‑mean inflation still above 3.0% (about 3.3–3.8% depending on the series), keeping inflation clearly outside the 2–3% target band.
• Recent monthly indicators remain sticky in services, housing‑related costs, and discretionary spending, with January and March data showing only modest easing and some upside surprises in housing‑price‑related components, underpinning the case for a stronger‑than‑expected May hike.
• Global growth has been modestly revised up but remains tempered by ongoing geopolitical tensions, commodity‑price volatility, and elevated oil prices linked to the Middle East conflict, which directly feed into Australian import‑price and transport‑cost inflation.
• Markets now price the cash rate at 4.35% in June, with futures pathways suggesting a high‑probability hold at the June meeting and only a modest chance of another 25bp hike later in 2026, contingent on further upside in CPI or services‑price data.
• The RBA continues to emphasise its “data‑dependent” approach under the dual mandate, seeking to bring inflation back toward target without materially undershooting growth or employment, while acknowledging that the Middle East‑driven shock has shifted the path of inflation and policy.
• The May communication leaned hawkishly neutral to hawkish, with the decision to hike by 25bp and a run‑of‑material referencing rising inflation expectations and the risk of second‑round effects, while still leaving room for a pause in June if upcoming monthly CPI and labour‑force data show a moderating trend.
• The next meeting is on 15 to 16 June 2026.

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 New Zealand dollar recently experienced mixed movements driven by two major events: it gained over 0.7% against the US Dollar on May 26th after the Reserve Bank of New Zealand (RBNZ) delivered a hawkish rate hold on its official cash rate, strengthening to a fresh multi-week high. However, the NZD then slid approximately 0.6% against the USD on May 27th following the New Zealand government’s unveiling of its annual fiscal budget, which markets viewed as less favorable for the currency.

Central Bank Notes:

• The Reserve Bank of New Zealand’s Monetary Policy Committee (MPC) held the Official Cash Rate (OCR) steady at 2.25% at its 27 May 2026 Monetary Policy Statement, but the decision was unprecedented—a 3-3 split requiring Governor Anna Breman’s casting vote. Three members (Hansen, Gourley, Gai) voted for an immediate 25bp hike to 2.50%, while three (Breman, Silk, Conway) voted to hold.
• While the OCR remained unchanged, the RBNZ issued its most hawkish guidance since the cutting cycle ended, stating the OCR will “likely need to rise sooner and by more than previously envisioned.” Market pricing now indicates a 72–73% probability of a rate hike at the next meeting on 8 July 2026, with swaps pricing in roughly 16bps of tightening.
• Annual CPI inflation remained at 3.1% in Q1 2026 (above the 1–3% target band) for two consecutive quarters. The RBNZ now forecasts inflation to peak at 4.3% in the September 2026 quarter—driven by Middle East oil shocks—before returning to the 2% target midpoint by mid-2027.
• The RBNZ revised its terminal OCR forecast upward to 3.28% over the next three years (from 3.0%), implying approximately 100 basis points of total tightening ahead. The updated path suggests at least two additional hikes by year-end 2026, with the OCR potentially rising to 2.50% by September 2026 and higher thereafter.
• GDP growth is projected at 0% in Q2 2026 and only 0.2% quarter-on-quarter in Q3, reflecting an early but unconvincing recovery. Unemployment, currently at 5.3% (near a decade-high), is expected to peak at 5.4% and remain there until June 2027.
• Retail sales volume rose 0.9% in Q1 2026, and electronic card data showed 2.7% annual growth in March, but high-frequency data reveals shrinking budget room as wholesale interest rates climb. Mortgage holders are increasingly shifting to two-year fixed rates for repayment certainty despite the OCR hold.
• Stronger dairy and meat export revenues (meat exports up 7% to $13.2B FY2026) and a softer NZD (TWI ~68%) support the external balance, while Middle East oil volatility poses upside inflation risks. The NZD jumped 0.7% against the USD immediately after the announcement, and two-year swap rates rose 3bps.
• Markets now expect the first hike in this tightening cycle, with the MPC’s internal division suggesting any future decision may again be contentious. Policy remains below the ~3% neutral rate, but the shift from “wait-and-see” to “preemptive tightening” is now clear.
• The next meeting is on 8 July 2026.

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 holding steady near 159.5 per dollar today as traders position ahead of the Bank of Japan’s expected rate hike on June 16, with markets pricing in a 77% probability of an increase from the current 0.75% policy rate. This follows Japan’s historic April 30 currency intervention, spending approximately $34.3 billion to defend the yen after it breached 160 per dollar, marking the first official FX intervention in nearly two years.

Central Bank Notes:

• The Policy Board of the Bank of Japan left the short‑term policy rate unchanged at 0.75% at the 27–28 April 2026 meeting, with markets broadly expecting the same level into May 2026 as the bank continues a data‑dependent, gradual‑normalisation stance.
• The BOJ targets the uncollateralized overnight call rate around 0.75%, signaling that any further hikes toward 1.0% will hinge on wage‑inflation persistence, yen stability, and real‑activity data rather than a pre‑announced timetable.
• JGB tapering continues on plan, with outright purchases trimmed by ¥400 billion quarterly through Q1 2026, then reduced to ¥200 billion from April onward, aiming for roughly ¥2–3 trillion in monthly net purchases by mid‑2026, adjustable if market or yen volatility spikes.
• Japan’s economy posts moderate growth into Q1 2026, supported by resilient exports and prior stimulus, but the BOJ has downgraded its 2026 growth outlook as external headwinds and Middle‑East‑related shocks weigh on the pace.
• Core CPI (ex‑fresh food) is running in the mid‑1% range y/y, with headline inflation at about 1.5% y/y in March 2026, while core‑core measures remain above 2%, reflecting sticky services‑side and wage‑driven inflation.
• Input‑cost pressures ease from prior peaks, yet services inflation, the 2026 shunto wage deals near 5%, and expectations anchored above 2% support continued price pressures, with upside risks from further yen weakness and geopolitical spikes.
• Near‑term real GDP may run below trend due to policy tightening and external shocks (e.g., Iran‑related energy risks), but negative real rates, wage gains, and targeted fiscal/capex support should underpin a gradual rebound in consumption and investment.
• Medium‑term, overseas recovery, labor‑shortage‑driven wage growth, and productivity improvements are expected to keep core inflation near or above 2%, enabling the BOJ to gradually lift rates toward 1.0% in 2026–2027 if activity and wage‑inflation conditions remain aligned.
• The next meeting is on 15 to 16 June 2026.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Oil markets are experiencing significant volatility on Tuesday, with prices surging over 5% amid escalating U.S.-Iran tensions and Iran’s threat to completely block the strategically vital Strait of Hormuz, through which approximately 20% of global oil passes. Brent crude climbed to approximately $97 per barrel while WTI reached around $94 per barrel as Iran halted diplomatic communications with the United States and the IRGC attacked cargo ships in the Persian Gulf.

Next 24 Hours Bias
Medium Bearish