IC Markets – Asia Fundamental Forecast | 04 November 2025

IC Markets – Asia Fundamental Forecast | 04 November 2025

What happened in the U.S. session?

U.S. equities, particularly tech stocks and AI leaders, were the main beneficiaries of headline news, while gold and Bitcoin gained on risk aversion from government shutdown concerns.​The dollar experienced volatility but ultimately recovered, and oil stayed nearly unchanged after OPEC+ developments.​Data releases highlighted ongoing U.S. manufacturing weakness, persistent inflation issues, and further uncertainty for Fed policy direction.​

What does it mean for the Asia Session?

Watch for the RBA’s decision and tone; a dovish or hawkish tilt could move AUD crosses.ECB speeches may influence EUR pairs if President Lagarde signals any policy shift.NZD may be volatile on employment and unemployment data, especially given expectations around a potential peak in joblessness. Global risk sentiment is positive but sensitive to central bank commentary and macro surprises. Oil and gold markets are active, impacted by supply decisions and ongoing dollar strength.

The Dollar Index (DXY)

Key news events today

JOLTS Job Openings (Tentative)

What can we expect from DXY today?

The dollar is currently supported by market positioning ahead of important labor market data and ongoing global economic uncertainty. Recent shifts in central bank guidance, especially from the Federal Reserve, have influenced sentiment. Traders are watching for any new clues on future US rate cuts, inflation, and international developments such as political instability in Japan and tariff threats from the Trump administration.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) voted, by majority, to lower the federal funds rate target range by 25 basis points to 3.75%–4.00% at its October 28–29, 2025, meeting, marking the second consecutive cut following the 25 basis points reduction in September.
• The Committee maintained its long-term objectives of maximum employment and 2% inflation, noting that the labor market continues to soften, with modest job creation and an unemployment rate edging higher. In comparison, inflation remains above target at around 3.0%.
• Policymakers highlighted ongoing downside risks to economic growth, tempered by signs of resilient economic activity. September’s consumer price index (CPI) came in slightly lower than expected at 3.0% year-over-year, easing inflation pressure but still warranting vigilance given tariff-driven price effects.
• Economic activity expanded modestly in the third quarter, with GDP growth estimates around 1.0% annualized; however, uncertainty remains elevated amid persistent global trade tensions and the U.S. government shutdown, which is impacting data availability.
• The updated Summary of Economic Projections reflects an anticipated unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections holding near 3.0%, indicating a slow easing path ahead.
• The Committee emphasized its flexible, data-dependent approach and underscored that future policy adjustments will be guided by incoming labor market and inflation data. As in prior meetings, there was dissent, including one member advocating a more aggressive 50-basis-point cut.
• The FOMC announced the planned conclusion of its balance sheet reduction (quantitative tightening) program, intending to cease runoff in the near term to maintain market stability, with Treasury redemption caps held steady at $5 billion per month and agency mortgage-backed securities caps at $35 billion.
• The next meeting is scheduled for 9 to 10 December 2025.

Next 24 Hours Bias

Medium Bullish 

Gold (XAU)

Key news events today

JOLTS Job Openings (Tentative)

What can we expect from Gold today?

Mixed macroeconomic signals shape gold’s stability near $4,000—US rate policies, China’s tax changes, and technical chart levels, while the longer-term outlook remains cautiously optimistic amid continued global uncertainty. Gold is consolidating after record highs, with a firm base near $4,000 as investors digest interest rate clues and major policy changes in China. Safe-haven demand has softened but remains strong; investor sentiment is generally bullish in Western markets, and technical setups indicate potential for renewed upward movement if key resistance levels are breached.

Next 24 Hours Bias
Weak Bearish

The Australian Dollar (AUD)

Key news events today

Cash Rate (3:30 am GMT)

RBA monetary policy statement (3:30 am GMT)

RBA rate statement (3:30 am GMT)

RBA press conference (4:30 am GMT)

What can we expect from AUD today?

The AUD is expected to remain sensitive to the RBA’s rate decision and accompanying statements. Stronger-than-forecast inflation has shifted the outlook towards an extended rate hold, supporting the currency even as global risk sentiment fluctuates. Watch for market volatility around Tuesday’s announcement and press conference, as traders digest RBA policy signals and updated economic guidance.

Central Bank Notes:

• The RBA held its cash rate steady at 3.60% at its October meeting on 29–30 September 2025, marking a second consecutive pause after August’s 25 basis point cut. The move affirms the Bank’s data-dependent approach as inflation trends within the target range.
• Inflation indicators remained stable through September, with headline CPI likely anchoring near 2.2%—comfortably within the 2–3% band. Insurance and housing costs remain sticky but are increasingly offset by moderation in discretionary goods.
• Trimmed mean inflation is estimated at around 2.8%, signaling underlying pressures remain contained. The Board continues to flag food and energy price volatility as short-term risks, though the broader disinflation narrative holds.
• Global conditions remain a source of uncertainty. U.S. policy expectations and uneven growth in China continue to weigh on commodities, even as trade disruptions have eased marginally since mid-year.
• Domestic growth shows resilience in the housing and services sectors, though manufacturing remains subdued. Household incomes have stabilized, but consumption remains only modest, capped by high borrowing costs.
• The labor market maintains relative tightness, though job growth has slowed notably since the first half of the year. Underutilization has ticked higher, but overall employment conditions remain supportive.
• Wage growth is plateauing, reflecting softer labor demand. Weak productivity continues to keep unit labor costs elevated, underscoring a medium-term concern highlighted repeatedly by the RBA.
• Household consumption prospects remain fragile. The combination of high rents and weak discretionary appetite suggests risks of a consumer-led slowdown in Q4 if confidence fails to rebound.
• The Board reiterated that subdued household spending poses risks to business sentiment and may dampen investment and job creation in the coming quarters.
• Monetary policy remains mildly restrictive. The RBA balanced confidence in inflation progress with caution around global and domestic demand risks, keeping further adjustments conditional on incoming data.
• The Bank reaffirmed its dual commitment to price stability and full employment, noting its readiness to act should conditions shift markedly.
• The next meeting is on 5 to 6 November 2025.

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

Employment change q/q (9:45 pm GMT)

Unemployment rate (9:45 pm GMT)

What can we expect from NZD today?

The New Zealand dollar faces significant pressure driven by a confluence of negative factors: a resilient US dollar supported by hawkish Fed rhetoric, weak Chinese manufacturing data weighing on export demand, concerns over US tariff impacts, and anticipation of rising unemployment. The critical employment data release will determine whether the RBNZ continues its aggressive easing cycle or pauses to assess economic developments.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to cut the Official Cash Rate (OCR) by 50 basis points to 2.50% on 8 October 2025, exceeding market expectations for a smaller 25-basis-point reduction and signaling a stronger commitment to reviving growth.
• The decision was reached by consensus, marking a shift from previous split votes, and reflected policymakers’ shared view that sustained economic weakness and persistent disinflationary pressures required a more front-loaded policy response.
• Annual consumer price inflation stood at 2.7% in the June quarter and is seen nearing 3% for the September quarter—above the 2% midpoint but within the 1–3% target range. Despite high near-term readings, the MPC projects inflation will return toward 2% by the first half of 2026 as spare capacity and moderating tradables curb price momentum.
• Policymakers acknowledged that domestic demand remains weak, with household spending, business investment, and construction activity under pressure. While still elevated, services inflation is expected to ease gradually as wage growth slows and unemployment edges higher.
• Financial conditions have eased with expectations as wholesale and retail borrowing rates adjust to lower policy settings. Bank lending data indicate a modest uptick in mortgage approvals, though broader credit demand remains subdued.
• GDP growth stalled in the middle of 2025, with high-frequency indicators showing continued weakness into the third quarter. A combination of elevated costs for essentials and falling savings continues to restrain household consumption, while global trade frictions weigh on business sentiment.
• The MPC noted that global uncertainty—particularly from US trade regulation changes and soft Chinese demand—continues to pose downside risks to export sectors, though these are partly offset by a weaker New Zealand dollar improving competitiveness.
• Subject to data confirming a sustained soft patch in activity and moderating inflation pressures, the MPC signaled further scope to reduce the OCR toward 2.25% at its next meeting on 26 November 2025, consistent with current market and Westpac forecasts.
• The next meeting is on 26 November 2025.

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news events

What can we expect from JPY today?

The Japanese yen remains under significant pressure as it trades near eight-month lows around 154.00-154.20 against the dollar on Tuesday, November 4. The BOJ’s continued dovish stance, despite two dissenting votes for a rate hike and accelerating Tokyo inflation, reflects Governor Ueda’s cautious approach amid global trade uncertainties. Prime Minister Takaichi’s massive fiscal stimulus plans further dampen rate hike expectations, while the policy divergence with a hawkish Federal Reserve continues to support USD/JPY carry trades.​

Central Bank Notes:

• The Policy Board of the Bank of Japan met on 30–31 October and, by a clear majority vote, decided to maintain its key monetary policy approach for the upcoming period.
• The BOJ will continue to encourage the uncollateralized overnight call rate to remain at around 0.5%, in line with the prior stance.
• The gradual quarterly reduction in monthly outright purchases of Japanese Government Bonds (JGBs) remains intact, with amounts unchanged from the previous schedule. Purchases are set to decrease by about ¥400 billion per quarter through March 2026, shifting to about ¥200 billion per quarter from April to June 2026, and targeting a ¥2 trillion purchase level for Q1 2027. The bank reaffirmed its intention to maintain flexibility, with readiness to respond if market conditions warrant an adjustment.
• Japan’s economy continues to show moderate recovery, primarily led by solid capital expenditures, although export growth and corporate activity remain restrained by external demand uncertainty and the ongoing effects of U.S. trade policies.
• Annual headline inflation (excluding fresh food) accelerated to 2.9% year-on-year in September, marking the first uptick in four months and staying above the BOJ’s 2% target. Broad-based inflation persists, with food and energy cost pressures, but wage growth continues to support household consumption. Input cost pressures from the earlier surge in imports eased slightly.
• Short-term inflation momentum could moderate as food-price hikes ease, though rent, healthcare, and service-sector price increases tied to labor shortages provide support. Firms and households maintain a gradual upward drift in inflation expectations.
• For the near term, BOJ projects growth below trend as external demand stays subdued and corporate investment plans remain cautious. Still, accommodative financial conditions and steady gains in real labor income will underpin domestic consumption.
• Over the medium term, as overseas economies recover and trade conditions normalize, Japan’s growth potential should improve. Persistent labor market tightness, higher wage settlements, and rising medium- to long-term inflation expectations are expected to keep core inflation on a gradual upward trajectory, converging toward the 2% price stability target later in the forecast horizon.
• The next meeting is scheduled for 18 to 19 December 2025.

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

API crude oil stock (8:30 pm GMT)

What can we expect from Oil today?

Tuesday’s oil market reflects competing dynamics: OPEC+’s cautious production approach and Russian supply risks provide near-term support, lifting WTI to around $61 per barrel and Brent to approximately $65. However, fundamental oversupply concerns dominate the medium-term outlook, with forecasters predicting substantial inventory builds through 2026 that could push prices significantly lower. The OPEC+ decision to pause production increases in Q1 2026 acknowledges these risks but may prove insufficient to prevent the anticipated 4 million bpd surplus.

Next 24 Hours Bias
Medium Bullish

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