IC Markets Global – Asia Fundamental Forecast | 29 January 2026
What happened in the U.S. session?
The standout event in the U.S. overnight session was the Federal Reserve’s decision to hold rates at 3.5%-3.75%, highlighting firm economic footing but persistent inflation, which fueled volatility primarily in the U.S. dollar (down sharply), gold (up over 8%), and oil (up ~2.7%), while equity futures remained mixed ahead of tech earnings like Apple and amid sector swings in semis and health insurers.
What does it mean for the Asia Session?
Asian traders on Thursday, January 29, 2026, should monitor yen strength pressuring USD/JPY below 154 amid potential US-Japan intervention speculation, alongside President Trump’s tariff hikes on South Korean vehicles, pharmaceuticals, and lumber from 15-25%, boosting safe-haven gold and silver demand.
The Dollar Index (DXY)
Key news events today
Unemployment Claims (1:30 pm GMT)
What can we expect from DXY today?
The US Dollar faced ongoing pressure, rebounding modestly above 96.60 on the DXY amid mixed signals from the Federal Reserve’s hawkish policy hold and President Trump’s comments downplaying its recent weakness. Fed Chair Jerome Powell’s press conference emphasized a firm economic footing with stabilizing labor markets, though inflation remained elevated and Q4 growth was impacted by a government shutdown; rates stayed at 3.5%-3.75% in a 10-2 vote.
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 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
Unemployment Claims (1:30 pm GMT)
What can we expect from Gold today?
Gold prices surged to record highs, driven by safe-haven demand amid global economic uncertainty, a weakening US dollar, and supportive global cues like ETF inflows and a softer rupee in India. Spot gold traded around $5,308 per ounce internationally, up over 2% from the prior day, while MCX gold in India jumped to ₹1.67 lakh per 10 grams for 24-carat, reflecting a weekly gain of about 13%.
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 AUD remains elevated near 0.7003, up 4.63% monthly and 12.41% yearly, as RBA hike odds rise against a dovish Fed outlook. A stronger AUD creates headwinds for exporters like beef producers. Geopolitical tensions and US data continue influencing flows, with consumer sentiment slipping on rate hike fears.
Central Bank Notes:
- The Reserve Bank of Australia held its cash rate steady at 3.60% at the November 2025 policy meeting, adopting a cautious tone amid a surprise uptick in inflation data for the September quarter. This marks the fourth consecutive pause since the 25 basis point cut in August. The Board attributed some of the inflation rise to temporary factors like higher petrol prices and council rates, but noted signs of more persistent pressures from consumer demand.
- Policymakers emphasized vigilance on inflation, with trimmed mean inflation expected to remain elevated in the near term before nearing the 2–3% target midpoint by mid-2027. Recent data showed underlying inflation staying above target until at least the second half of 2026, prompting upward revisions to forecasts. Capacity pressures are seen as slightly more pronounced than previously assessed, delaying any easing.
- Headline CPI for the September quarter exceeded expectations, driven partly by temporary items, while underlying measures signal ongoing stickiness. The shift to monthly CPI reporting, with the first full edition in November 2025, will enhance real-time inflation monitoring. Housing and services remain resilient contributors to price pressures.
- Domestic demand shows firmness in services alongside below-trend growth elsewhere, with capacity pressures not expected to ease significantly. The labor market is gradually softening, with unemployment projected to stabilize around 4.4%, though wage growth and productivity dynamics keep unit labor costs a concern. Household spending faces headwinds from high borrowing costs.
- Global risks include geopolitical tensions and commodity volatility, set against modestly revised-up world growth outlooks. The Board describes its policy as mildly restrictive and data-dependent, balancing inflation control with employment goals. No rate hike was considered despite the inflation surprise.
- Monetary policy remains mildly restrictive to address lingering price stability risks amid household and global vulnerabilities. Communications reaffirm the dual mandate of 2–3% inflation and full employment, with readiness to adjust based on incoming data.
- Market expectations point to the cash rate holding through early 2026, with a possible modest cut to 3.3% mid-year if inflation eases as forecast. The new monthly CPI data will be key for timely insights.
- Monetary policy remains mildly restrictive, balancing progress on price stability against vulnerabilities in household demand and global outlook. Board communications reaffirm a dual mandate: price stability and full employment, while underscoring readiness to respond should risks materialize sharply.
- Analysts generally expect the cash rate to remain at current levels through early 2026, with only modest cuts possible later in the year if inflation moderates. The new monthly CPI release (first full edition Nov 2025) will be watched closely for timely signals on price trends.
- The next meeting is on 2 to 3 February 2026.
Next 24 Hours Bias
Strong Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from NZD today?
The NZD/USD pair retreated modestly toward 0.6000 after peaking at 0.6051 earlier in the week, supported by hotter-than-expected NZ inflation at 3.1% and a weakening US Dollar amid soft consumer confidence data (84.5 in January). Over the past month, the kiwi has gained 3.75% and 6.49% year-over-year, with forecasts eyeing 0.60 by quarter-end and 0.61 in 12 months, though no major events are confirmed for today beyond trade data.
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
Medium Bullish
The Japanese Yen (JPY)
Key news events today
Tokyo Core CPI y/y (11:30 pm GMT)
What can we expect from JPY today?
The yen clings to gains from BoJ-Fed divergence but faces headwinds from Japan’s fiscal concerns, aggressive spending plans, and a rebounding dollar ahead of Fed comments, keeping USD/JPY volatile around 153-154 with bears cautious due to intervention risks.
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
Strong Bullish
Oil
Key news events today
No major news event
What can we expect from Oil today?
Oil markets show resilience amid ongoing U.S. winter storm disruptions and escalating geopolitical tensions, particularly involving U.S. President Donald Trump’s warnings to Iran, with an aircraft carrier dispatched to the Middle East. Brent crude hovered around $67-68 per barrel and WTI near $62-63, supported by U.S. production outages of up to 700,000-250,000 bpd in regions like Permian, Bakken, and Texas, though recovery is expected by January 30.
Next 24 Hours Bias
Weak Bearish
