IC Markets Global – Asia Fundamental Forecast | 05 June 2026
What happened in the U.S. session?
A negative earnings shock from Broadcom and a still-firm U.S. labor backdrop. The result was a clear risk-off reaction in semiconductors and Nasdaq-linked instruments, while Treasury yields and the dollar were supported by stronger payroll data and a hawkish Fed message; the main instruments moving hardest were Broadcom shares, semiconductor ETFs/indexes, Nasdaq futures, and U.S. Treasuries.
What does it mean for the Asia Session?
U.S. monthly employment report (non-farm payrolls) due at 8:30 a.m. ET, which will be pivotal for expectations around the Federal Reserve’s next policy move. The Japanese yen is approaching the critical 160 per dollar level, raising the risk of official intervention by Japanese authorities, while investors also await Bank of Japan Governor Kazuo Ueda’s speech for rate-hike signals. Oil markets remain under pressure as traders monitor U.S.–Iran peace talks and potential progress on reopening the Strait of Hormuz; a deal would ease supply concerns and benefit oil-importing Asian economies like Japan.
The Dollar Index (DXY)
Key news events today
Average Hourly Earnings m/m (12:30 pm GMT)
Non-Farm Employment Change (12:30 pm GMT)
Unemployment Rate (12:30 pm GMT)
What can we expect from DXY today?
The dollar is being driven less by one single headline and more by the balance between U.S. growth/inflation resilience, shifting Treasury yields, and safe-haven demand. Recent reporting shows traders reacting to higher yields and changing Fed bets, while EUR/USD has been edging higher near 1.16 as the dollar’s direction remains uneven rather than strongly one-way.
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 Bullish
Gold (XAU)
Key news events today
Average Hourly Earnings m/m (12:30 pm GMT)
Non-Farm Employment Change (12:30 pm GMT)
Unemployment Rate (12:30 pm GMT)
What can we expect from Gold today?
Gold is still trading with a bullish-to-neutral bias into Friday, with the market balancing strong safe-haven demand against persistent pressure from high U.S. rates and a firm dollar. Recent reporting also points to central-bank buying and geopolitical risk as key supports, while near-term forecasts flag the $4,500 area as an important support zone and the $4,700–$4,725 region as resistance.
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 was trading near 0.7132 on June 3, 2026, and was down 0.68% on the session, with Trading Economics noting that the currency has weakened slightly over the past month but remains up nearly 10% over the past year. The main drivers behind the recent move are still the RBA’s policy outlook, shifting market expectations around rates, and broader US dollar sentiment, which have kept AUD/USD choppy around the 0.71 handle.
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 Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from NZD today?
The New Zealand Dollar is currently trading around 0.586-0.590 NZD/USD as of early June 2026, having recently pulled back from its 5-week high. The RBNZ, under new Governor Anna Breman, kept the Official Cash Rate steady at 2.25% but signaled readiness to raise rates if core inflation picks up amid rising fuel prices, with markets pricing in a rate hike by July 2026. The kiwi’s near-term trajectory depends heavily on inflation data and the RBNZ’s policy stance.
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 yen weakened sharply into early June 2026 as traders pushed it back toward levels that previously triggered intervention, while officials in Tokyo warned against one-sided moves and markets kept debating whether the Bank of Japan would hike rates soon enough to support the currency. That mix has left the yen vulnerable, especially because recent pricing suggests investors still see policy support as uncertain even after past intervention episodes.
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
No major news event
What can we expect from Oil today?
Oil markets remain dominated by Middle East supply disruptions and geopolitical uncertainty around Iran. The EIA reports that Middle East production disruptions have intensified since April, with 10.5 million barrels per day shut in across Iraq, Saudi Arabia, Kuwait, UAE, Qatar, and Bahrain, while the Strait of Hormuz remains effectively closed. Despite this tight supply, Brent crude has retreated from its April highs of $138/barrel to around $106/barrel in May-June 2026, as global inventories draw down by 8.5 million barrels daily.
Next 24 Hours Bias
Weak Bullish
