IC Markets Global – Asia Fundamental Forecast | 18 February 2026

IC Markets Global – Asia Fundamental Forecast | 18 February 2026

What happened in the U.S. session?

Ongoing reactions to softer-than-expected January CPI data from Friday, which fueled expectations for Federal Reserve rate cuts (with markets pricing in 62 basis points of easing for the year, implying two to three quarter-point reductions starting in June), alongside anticipation for upcoming FOMC minutes, core PCE inflation, durable goods orders, and flash PMIs later in the week. U.S.

What does it mean for the Asia Session?

Lunar New Year holidays continue to close key markets like mainland China, Hong Kong, Singapore, Malaysia, Taiwan, and South Korea, limiting liquidity and amplifying volatility in open markets such as Japan’s Nikkei and Australia’s ASX. Key developments include steady oil prices amid Iran’s drills near the Strait of Hormuz ahead of US talks, potential BOJ rate hike signals for April targeting 1.25%, and RBA minutes highlighting inflation risks that drove recent hikes.

The Dollar Index (DXY)

Key news events today

Core Durable Goods Orders m/m (1:30 pm GMT)

Durable Goods Orders m/m (1:30 pm GMT)

FOMC Meeting Minutes (7:00 pm GMT)

What can we expect from DXY today?

The US dollar maintained modest gains in quiet markets, hovering near 97-101 on the DXY amid holiday-thinned volumes and ahead of pivotal releases like Fed minutes, US GDP, and Core PCE that could sway rate cut expectations starting in June. Forecasts lean neutral-to-bearish for the week (DXY range 99.5-101.5), driven by Fed easing signals and global growth stabilization.

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 January 27–28, 2026, meeting, marking the second consecutive pause after three 25-basis-point cuts in late 2025.
• The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market remaining soft as the unemployment rate stood at 4.4% in December 2025 amid modest job gains of 50,000.
• Officials note balanced risks to growth and employment alongside sticky inflation, with CPI at 2.7% year-over-year in December 2025 and core PCE at 2.8% due to tariffs and housing pressures; headline PCE at 2.6%.
• Economic activity expanded robustly at 4.4% annualized in Q3 2025, with Q4 estimates around 5% per Atlanta Fed GDPNow, supported by consumer spending despite prior trade tensions and shutdown effects.
• December 2025’s Summary of Economic Projections forecasts 2025 unemployment at a median of 4.5%, 2026 GDP growth at 2.3%, and core PCE at 2.5% (down from prior 2.6%), with the dot plot signaling one more cut in 2026; January updates may reflect resilient Q4 growth.
• The Committee maintained its data-dependent approach, noting a stable but soft labor market and inflation above target, while holding rates steady at 3.50%-3.75%; dissents likely persist amid divisions on the pace of easing.
• The FOMC continues its adjusted quantitative tightening post-December 1, 2025, conclusion of the prior program, with Treasury rolloff caps at $5 billion per month and agency MBS at $35 billion per month to maintain ample reserves.
• The next meeting is scheduled for 17 to 18 March, 2026.

Next 24 Hours Bias

Medium Bearish

Gold (XAU)

Key news events today

Core Durable Goods Orders m/m (1:30 pm GMT)

Durable Goods Orders m/m (1:30 pm GMT)

FOMC Meeting Minutes (7:00 pm GMT)

What can we expect from Gold today?

Gold prices declined, falling to around $4,897 per troy ounce, down 1.88% from the prior day amid a rebounding US Dollar and thin trading volumes during the Lunar New Year holidays in Asia. Forecasts for February 18 suggest continued downside pressure, with XAU/USD potentially testing $4,821–$4,965, driven by a developing bearish Rising Wedge pattern and upcoming FOMC minutes release.

Next 24 Hours Bias
Weak Bearish

The Australian Dollar (AUD)

Key news events today

Wage Price Index q/q (12:30 am GMT)

What can we expect from AUD today?

The Australian Dollar remains range-bound near 0.7060 against the USD following yesterday’s RBA minutes, which underscored data-driven policy without signaling aggressive tightening, leading to a modest pullback amid steady US Dollar resilience; no major new catalysts have emerged today, with focus shifting to domestic employment figures and global risk appetite for near-term direction.

​
Central Bank Notes:

• The Reserve Bank of Australia (RBA) is expected to hold its cash rate at 3.85% at the March 16-17, 2026 policy meeting, following the widely anticipated 25 basis point hike to 3.85% in early February after persistent inflation pressures from late 2025. While some banks like CBA, NAB, and Westpac now forecast a further 25 basis point rise to 4.10% as soon as May if inflation data remains sticky, consensus tilts toward a pause in March to assess incoming monthly CPI and labor market signals. The February hike reversed prior cuts, entering mildly restrictive territory amid capacity pressures, with the board emphasizing data dependence.
• Inflation remains elevated, with December 2025 CPI at 3.8% year-on-year and trimmed mean at 3.3%, above the 2–3% target midpoint. RBA’s February Statement revised forecasts higher, projecting trimmed mean inflation to peak in mid-2026 above 3% and stay elevated through early 2027, driven by services, housing, and demand resilience despite some monthly cooling like January’s 0.2% MoM gauge. Monthly CPI data continues to highlight core stickiness beyond energy rebates, delaying the target return to late 2027 or beyond.
• January 2026 monthly indicators showed modest easing, but headline CPI risks upward surprises from housing (up recently) and services amid firm domestic demand. Trimmed mean pressures persist from wage growth and capacity constraints, with consumer expectations ticking to 5% YoY in February surveys. Enhanced monthly reporting sharpens vigilance on potential broad-based pick-up.
• The labor market shows softening, with unemployment around 4.1-4.4%, down slightly to 4.1% in December, but unit labor costs are elevated due to subdued productivity. Household spending faces higher borrowing costs post-hike, yet private demand recovery sustains capacity strains. Vulnerabilities persist amid resilient employment dynamics.
• Global growth modestly revised up but tempered by geopolitics and commodity volatility; policy now restrictive post-February, with the RBA balancing inflation against employment risks. Data from the monthly CPI and Q1 GDP will guide, amid household debt sensitivities.
• Sustained restrictive stance post-February anchors inflation return to target, upholding dual mandate with flexibility to new risks like further inflation upticks.
• Markets price a March hold at 3.85%, with big four banks split: CBA, NAB, Westpac eye May hike to 4.10% if persistence continues, while others see limited upside unless acceleration. Upcoming monthly CPI pivotal for Q2 trajectory.
• Policy vigilance counters inflation stickiness against household fragilities and global uncertainties, reaffirming adaptability under dual mandate.
• Base case favors March hold with risks tilted hawkish for further hikes if data is hot; monthly indicators key to 2026 path.
• The next meeting is on 5 to 6 May 2026.

Next 24 Hours Bias

Strong Bullish

The Kiwi Dollar (NZD)

Key news events today

Official Cash Rate (1:00 am GMT)

RBNZ Monetary Policy Statement (1:00 am GMT)

RBNZ Rate Statement (1:00 am GMT)

RBNZ Press Conference (2:00 am GMT)

What can we expect from NZD today?

The New Zealand Dollar steadied near 0.6040 versus the USD, building on recent gains as traders awaited the RBNZ’s Monetary Policy Statement later that day, widely forecasted to maintain rates at 2.25% while providing fresh insights into inflation and growth outlooks.

Central Bank Notes:

• The Monetary Policy Committee (MPC) left the Official Cash Rate (OCR) unchanged at 2.25% at its 26 November 2025 meeting, following the widely anticipated 25-basis-point reduction from 2.50%, and signaled that policy is now firmly in stimulatory territory while keeping the option of further easing on the table if needed.
• The decision was again reached by consensus, with members judging that the cumulative 325 basis points of easing over the past year warranted a period of assessment, even as several emphasized a willingness to cut further should incoming data point to a more protracted downturn or renewed disinflationary pressures.
• Headline consumer price inflation is projected to hover near 3% in late 2025 before gradually easing toward the 2% midpoint of the 1–3% target band through 2026, supported by contained inflation expectations around 2.3% over the two-year horizon and an expected pickup in spare capacity.
• The MPC noted that domestic demand remains subdued but shows tentative signs of stabilisation, with softer household spending and construction only partially offset by improving services activity; nevertheless, policymakers still expect services inflation to ease as wage growth moderates and the labour market loosens further over the coming year.
• Financial conditions continue to ease as wholesale and retail borrowing rates reprice to the lower OCR, contributing to gradually rising mortgage approvals and improving housing-related sentiment, although broader business credit growth remains patchy and sensitive to uncertainty about the durability of the recovery.
• Recent data confirm that GDP momentum is weak but not deteriorating as sharply as earlier in 2025, with high-frequency indicators pointing to a shallow recovery from a low base and ongoing headwinds from elevated living costs and fragile confidence weighing on discretionary consumption and investment.
• The MPC reiterated that external risks remain skewed to the downside, particularly from softer Chinese demand and uncertainty around United States trade policy, but noted that a lower New Zealand dollar continues to provide some offset via improved export competitiveness and support for tradables inflation.
• Looking ahead to early 2026, the Committee maintained a mild easing bias, indicating that a further cut toward 2.00–2.10% cannot be ruled out if activity fails to gain traction or if inflation undershoots projections, but current forecasts envisage the OCR remaining near 2.25% for an extended period, provided inflation converges toward target and the recovery proceeds broadly as expected.
• The next meeting is on 18 February 2026.

Next 24 Hours Bias

Strong Bullish

The Japanese Yen (JPY)

Key news events today

No major news event

What can we expect from JPY today?

The Yen firmed slightly to 153.37 per USD, driven by BoJ rate hike speculation and fiscal policy optimism under PM Takaichi, despite lingering fiscal and growth concerns; it posted a sharp weekly gain but remains below yearly highs, with analysts eyeing further support from potential April tightening.

Central Bank Notes:

• The Policy Board of the Bank of Japan meets on 22–23 January 2026, with markets fully expecting the short-term policy rate to remain at 0.75%, following the December 2025 hike, as the bank assesses the impact of prior tightening while emphasizing gradual, data-dependent adjustments.
• The BOJ will continue targeting the uncollateralized overnight call rate around 0.75% and signal that future rate hikes depend on the effects of recent increases on bank lending, corporate financing, and economic activity, with some policymakers eyeing a possible move as early as April.
• JGB purchase tapering proceeds on schedule, with outright purchases reduced by ¥400 billion per quarter through March 2026, then ¥200 billion per quarter from April to June 2026, aiming for around ¥2 trillion monthly in Q1 2027, with flexibility if market conditions worsen.
• Japan’s economy showed recovery signs after the Q3 2025 contraction, with Q4 2025 GDP growth estimated positively amid export strength, though business sentiment among manufacturers softened to a six-month low of +7 in January 2026 due to weaker overseas demand.
• Core consumer inflation (excluding fresh food) eased to 2.3% year-on-year in December 2025 Tokyo CPI, down from 2.8-3.0% peaks earlier, while core-core (excluding fresh food and energy) stood at 2.6%, both above the 2% target but with moderating cost pressures.
• Near-term input costs continue easing from faded import surges, but services inflation and steady wage gains with early 2026 negotiations targeting 5% hikes sustain price momentum; medium-term inflation expectations remain anchored above 2%, tilting upside risks.
• In the coming quarters, real growth may moderate below potential amid tighter conditions and yen weakness, but accommodative real rates, real wage gains, and fiscal support are poised to bolster private consumption and investment recovery.
• ​Medium-term, stabilizing overseas demand and tight labor markets should drive wage growth and keep core inflation gradually around or above 2%, allowing cautious rate normalization if financial conditions stay supportive.
• The next meeting is scheduled for April 2026.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

Oil markets remain cautious with WTI steady near $63 and Brent around $67, pressured by IEA’s surplus outlook and OPEC+ production signals, yet buoyed by US-Iran talks and Hormuz tensions; no fresh disruptions emerged overnight, but traders eye potential deal progress under President Trump that could ease risks or spark further dips amid persistent oversupply.

Next 24 Hours Bias
Medium Bearish