IC Markets – Asia Fundamental Forecast | 14 November 2025

IC Markets – Asia Fundamental Forecast | 14 November 2025

What happened in the U.S. session?

The U.S. overnight session delivered a tale of two markets. While the government reopening on November 12 provided political relief and initially boosted cyclical sectors, deeper concerns about Federal Reserve policy, economic data unavailability, and stretched technology valuations triggered one of November’s sharpest selloffs on Thursday. The collapse in December rate cut expectations from 96% to 52% probability reflected growing Fed hawkishness amid persistent 3% inflation and labor market uncertainty.

What does it mean for the Asia Session?

Asian markets on Friday face a data-heavy session with China’s October industrial production and retail sales taking center stage alongside US retail sales and PPI. The recently ended US government shutdown should allow official data releases to resume, providing clarity on Fed policy direction. Japan’s yen remains under pressure near intervention levels (155), though actual action appears unlikely given Prime Minister Takaichi’s fiscal expansion plans

The Dollar Index (DXY)

Key news events today

No major news event

What can we expect from DXY today?

The US dollar in a consolidation phase around 99.30 on the DXY index, caught between conflicting forces. The end of the government shutdown provides relief but leaves economic scars estimated at $14 billion in permanent losses. Federal Reserve policy remains highly uncertain, with December rate cut odds hovering around 54% as officials navigate inflation concerns, labor market weakness, and missing economic data. The dollar has weakened significantly over the past year, down 7.08%, as Trump’s aggressive tariff policies and political uncertainty challenge its traditional safe-haven status.

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

Weak Bearish 

Gold (XAU)

Key news events today

No major news event

What can we expect from Gold today?

Gold’s powerful rally to three-week highs reflects a compelling convergence of monetary policy expectations, geopolitical uncertainty, and structural demand shifts from central banks. The 63-68% probability of a December Federal Reserve rate cut, combined with 12 consecutive months of Chinese central bank buying and resolution of the U.S. government shutdown, has created favorable conditions for continued precious metals strength.

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 is trading firmly around 0.6556, supported by stronger-than-expected employment data that has sharply reduced expectations of RBA rate cuts. The currency has gained 1.03% over the past month and 1.52% over the past year. Key factors underpinning the AUD’s strength include a resilient domestic labor market, the RBA’s commitment to maintaining a restrictive policy stance amid persistent inflation, improved US–China trade relations, and renewed weakness in the US dollar following the resolution of the government shutdown.

Central Bank Notes:

• The Reserve Bank of Australia held its cash rate steady at 3.60% at the November policy meeting, citing persistent inflationary pressures and lingering uncertainties in both domestic and global outlooks. This is the third consecutive pause following the cut in August.​
• Policymakers remain alert to renewed inflation momentum. After a temporary uptick in September’s CPI, trimmed mean inflation for Q3 stands at 3.0%, above the intended 2–3% band. The RBA now anticipates that core inflation will stay above target until at least mid-2026, delaying any hopes of further easing.
• Headline CPI climbed by 3.2% in the year to September 2025, driven by resilient housing (+2.5%) and insurance costs, while discretionary goods inflation is subdued. The transition to monthly CPI reporting from November will improve the accuracy of inflation tracking.​
• Domestic demand remains firm, particularly in services and housing, while manufacturing and discretionary retail continue to lag. Household incomes have stabilized, but high borrowing costs and elevated rents are constraining consumption and risking a slowdown in Q1 2026.
• Labor market tightness persists, though job growth has moderated. Underutilization edged higher. Wage growth is plateauing, but weak productivity is keeping unit labor costs elevated—a medium-term risk that remains central to the Board’s narrative.
• The RBA highlights geopolitical tensions and volatile commodity markets as primary global risks, against a backdrop of modest upward revisions to world growth forecasts. The Board stresses that its stance remains “cautious and data-dependent,” with ongoing vigilance on inflation, labor, and spending trends.
• 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 9 December 2025.

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 faces a challenging environment on trading near 0.5650 as multiple headwinds converge. Domestically, weak manufacturing activity (PMI at 49.9), rising unemployment (5.3%), and expectations for continued RBNZ rate cuts (25 basis points expected on November 26 to 2.25%) are weighing on the currency. The central bank’s aggressive easing cycle reflects deep concerns about economic fragility, with markets pricing in rates falling to 2.00% by 2026.

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

Medium Bearish

The Japanese Yen (JPY)

Key news events today

No major news events

What can we expect from JPY today?

The Japanese yen faces a confluence of bearish pressures. Prime Minister Takaichi’s pro-stimulus stance and preference for keeping rates low has created policy uncertainty that undermines yen strength, even as underlying inflation trends would typically warrant Bank of Japan tightening. The persistent decline in real wages for nine straight months complicates the central bank’s policy calculus, as Governor Ueda seeks wage-driven rather than cost-push inflation.

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

Weak Bearish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Oil markets face mounting oversupply pressures as production growth significantly outpaces demand expansion. Key developments include:Prices: Brent trading around $63/barrel and WTI near $58.85/barrel after recovering modestly from 4% Wednesday losses that pushed both benchmarks to three-week lows.​Supply Outlook: OPEC now acknowledges Q3 2025 supply surplus of 500,000 barrels per day; IEA projects 2026 global surplus exceeding 4 million barrels per day with supply growing 3.1 million barrels per day in 2025 and 2.5 million barrels per day in 2026.

Next 24 Hours Bias
Weak Bearish

The post IC Markets – Asia Fundamental Forecast | 14 November 2025 first appeared on IC Markets | Official Blog.