IC Markets Global – Asia Fundamental Forecast | 18 June 2026

IC Markets Global – Asia Fundamental Forecast | 18 June 2026

What happened in the U.S. session?

A much stronger-than-expected U.S. retail sales report, which highlighted continued consumer resilience and reinforced expectations that the Federal Reserve will maintain a relatively hawkish stance. The U.S. dollar strengthened, Treasury yields edged higher, and risk assets traded cautiously ahead of the Fed decision. Oil prices remained volatile as markets weighed prospects of increased Iranian supply against ongoing uncertainty surrounding the U.S.-Iran agreement and broader Middle East tensions.

What does it mean for the Asia Session?

The market’s interpretation of the Fed’s latest policy statement and forward guidance. Traders should expect potential volatility across USD pairs, gold, equity indices, and bond markets. The BOJ’s recent tightening move, changing oil-price dynamics, and broader risk sentiment linked to Middle East developments remain important secondary themes. Overall, central bank policy expectations continue to dominate market direction heading into the latter part of the week.
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The Dollar Index (DXY)

Key news events today

Philly Fed Manufacturing Index (12:30 pm GMT)

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

The U.S. dollar enters Thursday with a moderately bullish tone after the Fed reinforced a higher-for-longer interest-rate narrative. As long as inflation concerns remain elevated and economic data stay resilient, the dollar is likely to retain support against most major currencies. However, today’s labor-market data and global central bank decisions could trigger sharp intraday moves across the FX market.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) left the federal funds rate unchanged at 3.50%–3.75% at its June 16–17, 2026, meeting, marking another pause in the policy cycle. Under new Fed Chair Kevin Warsh, policymakers signaled a more cautious and hawkish stance as inflation remains above target despite moderating energy prices.
• The Committee remains committed to achieving maximum employment and returning inflation to its 2% objective. Labor market conditions have remained relatively stable, with job gains continuing at a moderate pace and the unemployment rate projected to remain near 4.4% through 2026.
• Inflation continues to be the primary concern for policymakers. Headline inflation remains elevated, supported by earlier energy-related price pressures and persistent services inflation. The June projections showed higher inflation forecasts than previously expected, leading several officials to favor keeping policy restrictive for longer.
• Economic activity continues to expand at a moderate pace. Productivity growth, capital investment, and AI-related spending remain supportive of growth, while consumer spending and housing activity show signs of slowing compared with late 2025 and early 2026.
• The June 2026 Summary of Economic Projections (SEP) revealed a more divided Committee. Nine officials projected at least one rate hike during 2026, while others expected rates to remain unchanged or eventually decline. The median outlook shifted toward a higher-for-longer policy path compared with earlier projections.
• The Committee emphasized a data-dependent approach and noted that future decisions will depend on incoming inflation, employment, and economic growth data. Officials acknowledged that geopolitical developments and energy markets remain important upside risks to inflation.
• The FOMC continues its balance sheet normalization program, maintaining Treasury runoff caps at $5 billion per month and agency mortgage-backed securities (MBS) runoff caps at $35 billion per month, while ensuring ample reserves remain in the banking system.
• The next meeting is scheduled for 28 to 29 July 2026.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

Philly Fed Manufacturing Index (12:30 pm GMT)

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

Gold is trading with a moderately bullish tone. The primary drivers are the Federal Reserve’s policy outlook, ongoing geopolitical uncertainty, and persistent central-bank demand. If the Fed signals a softer monetary policy path, gold could extend its recent recovery. However, a more hawkish-than-expected message may trigger short-term profit-taking and limit gains.

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 remains sensitive to central bank policy expectations and global risk sentiment following this week’s Reserve Bank of Australia (RBA) decision. The RBA left its cash rate unchanged at 4.35%, ending a series of rate hikes but maintaining a hawkish tone by warning that further tightening may still be required if inflation remains persistent. Markets are now closely watching the U.S. Federal Reserve’s policy announcement, as any shift in Fed guidance could significantly influence AUD/USD.

Central Bank Notes:

• The Reserve Bank of Australia (RBA) kept its cash rate unchanged at 4.35% at the 15–16 June 2026 meeting, maintaining a restrictive policy stance as policymakers assessed whether the May rate increase was sufficient to contain renewed inflation pressures.
• The RBA voted to hold the cash rate at 4.35%, reiterating that inflation remains too high and warning that monetary policy may need to stay restrictive for an extended period, while leaving the door open to further tightening if price pressures persist.
• Inflation remains elevated, with headline CPI still above the RBA’s 2–3% target range, while underlying inflation measures, particularly trimmed mean CPI, continue to show sticky price pressures in services, rents, insurance, and household expenses, complicating the disinflation process.
• Labour-market conditions remain relatively resilient despite signs of gradual cooling, with unemployment staying historically low and wage growth still elevated enough to risk reinforcing inflation persistence, especially in labour-intensive service sectors.
• External risks remain important to the outlook, as elevated commodity prices and ongoing geopolitical tensions in the Middle East continue to pose upside risks to energy costs and imported inflation, while slower growth in major trading partners—particularly China—creates downside risks for Australian exports.
• Financial markets broadly price the cash rate remaining at 4.35% through July, with expectations favouring an extended pause unless inflation or labour-market data materially surprise to the upside; however, markets still assign a limited probability of one additional hike later in 2026.
• The RBA continues to stress a “data-dependent” policy framework, emphasizing that future decisions will be guided by inflation, employment, wages, and consumer-spending data, while balancing the need to restore price stability without unnecessarily weakening economic activity.
• The June communication maintained a hawkish-neutral tone, acknowledging some progress in inflation moderation but emphasizing that risks remain skewed to the upside, particularly from sticky domestic services inflation and external energy-price shocks, supporting a cautious approach into the July meeting.
• The next meeting is on 6 to 7 July 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 enters Thursday on a cautious footing. Weak manufacturing data and geopolitical risks are weighing on sentiment, while traders await New Zealand GDP figures for fresh clues on the economy and the RBNZ’s next move. A stronger-than-expected GDP reading could support the Kiwi by reinforcing expectations of future policy tightening, whereas a disappointing result may increase pressure on NZD/USD, which has already softened in recent sessions.

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

Medium 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-decade lows against the U.S. dollar despite the BOJ’s rate hike to 1.00%. Markets remain focused on the Federal Reserve’s policy outlook, which is limiting the yen’s recovery. Intervention concerns are rising as USD/JPY hovers around 160, while the BOJ’s increasingly hawkish tone and easing energy prices could provide medium-term support for the currency. For now, the yen’s direction will largely depend on Fed guidance and whether U.S.-Japan yield spreads begin to narrow.

Central Bank Notes:

• The Policy Board of the Bank of Japan maintained the short-term policy rate at 0.75% during the 15–16 June 2026 meeting, in line with market expectations, while reiterating a cautious and data-dependent approach to further policy normalization amid mixed domestic and external conditions.
• The BOJ continues to target the uncollateralized overnight call rate around 0.75%, with policymakers signaling that any move toward 1.0% will depend on sustained wage growth, inflation durability above target, stable financial conditions, and limited downside risks to growth rather than a fixed tightening schedule.
• JGB purchase tapering remains on track, with monthly bond buying continuing to moderate under the previously announced framework. The BOJ maintains flexibility to intervene or temporarily adjust purchase operations if sharp volatility emerges in the Japanese government bond market or if excessive yen fluctuations threaten financial stability.
• Japan’s economy shows moderate but uneven growth entering mid-2026, supported by resilient domestic demand, corporate investment, and recovering external activity, although weaker global manufacturing momentum and geopolitical tensions continue to weigh on the export outlook.
• Core CPI (excluding fresh food) remains near the mid-1% y/y range, while underlying inflation indicators, including core-core measures and services inflation, continue to hover around or above 2%, supported by stronger wage dynamics and pass-through effects from prior cost increases.
• Domestic inflation pressures remain supported by 2026 shunto wage settlements near 5%, labor shortages, and firm services pricing. However, easing import costs and stabilizing commodity prices are helping moderate headline inflation, while risks persist from renewed energy volatility and yen depreciation.
• Near-term real GDP growth may remain below trend, reflecting the lagged impact of tighter financial conditions and external uncertainty, but rising household incomes, accommodative real rates, and fiscal support measures are expected to gradually support consumption and business investment.
• Over the medium term, the BOJ continues to expect that labor-market tightness, wage growth, and structural productivity improvements will help sustain inflation around the 2% target, leaving room for a gradual move toward 1.0% policy rates into late-2026 or 2027, provided inflation and economic momentum remain aligned.
• The next meeting is on 30 to 31 July 2026.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Oil prices are currently being pulled in opposite directions. On one hand, falling U.S. inventories and lingering uncertainty around the Strait of Hormuz provide support. On the other hand, improving prospects for Iranian exports, increased Middle Eastern supply, and expectations of higher future production from major producers are weighing on prices. The market’s near-term focus remains on the pace of shipping normalization through Hormuz and any further geopolitical developments in the region.

Next 24 Hours Bias
Medium Bearish