IC Markets Gobal – Europe Fundamental Forecast | 08 December 2025

IC Markets Global – Europe Fundamental Forecast | 08 December 2025

What happened in the Asia session?
Asian markets in today’s Asia session traded mixed, with Chinese assets and the yuan supported by a surprise rebound in exports, while Japanese stocks underperformed on softer growth revisions and ongoing positioning for a potential Bank of Japan shift; overall risk tone remained cautious ahead of this week’s Fed and RBA meetings, which helped the dollar stabilise after recent weakness. The instruments most directly impacted were Chinese and Hong Kong equity indices, the onshore and offshore yuan, Japanese equities and the yen, Indian equities, and broader Asia FX that is sensitive to Fed and RBA expectations.

What does it mean for the Europe & US sessions?
Today sets the stage rather than delivers the main act: data are light but include Eurozone Sentix and German industrial production, which can shape EUR and European equity tone into the FOMC. The main driver remains positioning and narrative around an almost fully priced Fed cut, with oil firms, the dollar softer, and option expiries potentially steering intraday FX flows as European and then US traders step in.

The Dollar Index (DXY)

Key news events today

No major news event

What can we expect from DXY today?

The Dollar is starting Monday on the back foot, with DXY hovering just below 99 after two weeks of selling as traders price in a near‑certain Fed rate cut and react to softer US labor, manufacturing and inflation data that have eroded the currency’s yield appeal. EUR, GBP, and key commodity currencies such as AUD, NZD and CAD are holding gains against USD, gold is firmer on the weaker‑Dollar/lower‑rates story, and market commentary frames any near‑term Dollar bounces as corrective within a broader environment of gradual USD softening into this week’s FOMC decision.

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 anticipates an unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections remaining 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. Treasury redemption caps will remain steady at $5 billion per month, and agency mortgage-backed securities caps will remain at $35 billion.
• The next meeting is scheduled for 9 to 10 December 2025.

Next 24 Hours Bias
Medium bearish

Gold (XAU)

Key news events today

No major news event

What can we expect from Gold today?

Gold is trading near record highs on Monday, 8 December 2025, supported by a softer US dollar and strong expectations of a Federal Reserve rate cut this week, with price action still in a broadly bullish structure. Spot gold is around 4,210–4,215 USD/oz in early Monday trade, up roughly 0.3% on the session and about 0.3% higher than Friday’s close.

Next 24 Hours Bias   
Medium Bullish

The Euro (EUR)

Key news events today

No major news event

What can we expect from EUR today?

The euro is modestly firmer to start the week, supported by softer US yields and stable ECB guidance, with EUR/USD trading in the mid‑1.16s and sentiment cautiously bullish into Wednesday’s Fed decision. Technical and macro outlooks suggest upside attempts toward the 1.17–1.18 area are possible in the early part of the week, but overall, the euro remains in a broader consolidation with risks in both directions around central‑bank events.

Central Bank Notes:

• The Governing Council of the ECB kept the three key interest rates unchanged at its 30 October 2025 meeting. The main refinancing rate remains at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. This decision reflects policymakers’ assessment that the current monetary stance remains consistent with medium-term price stability, while incoming data confirm a gradual return of inflation towards the target.
• Recent indicators point to stable price dynamics. Headline inflation remains near the 2% mark, with energy prices contained and food inflation easing slightly after earlier supply bottlenecks. Wage growth continues to moderate, contributing to the slowdown in domestic cost pressures. The ECB reiterated its commitment to a data-driven, meeting-by-meeting approach and emphasized flexibility amid uncertain global financial conditions.
• Eurosystem staff projections have not been materially altered since September. Headline inflation averages remain at 2.0% for 2025, 1.8% for 2026, and 2.0% for 2027. Recent softening in producer prices and subdued pipeline pressures suggest limited upside risks to inflation, though geopolitical tensions and potential commodity shocks continue to pose uncertainties to the outlook.
• Euro area GDP growth remains on track with earlier forecasts, projected at 1.1% for 2025, 1.1% for 2026, and 1.4% for 2027. Forward-looking indicators, including PMIs and industrial sentiment surveys, signal some stabilization in activity following weakness in the third quarter. Public investment and recovering export activity are expected to offset softer private sector demand in the near term.
• The labor market remains resilient, with unemployment rates at multi-decade lows and participation rates strong. Real income growth continues to support household spending, even as consumption growth normalizes from earlier highs. Financing conditions remain favorable, supported by stable banking-sector liquidity and improved credit demand among small and medium-sized firms.
• Business sentiment remains mixed, reflecting lingering uncertainty over global trade policy and the path of US tariffs. However, easing supply chain costs and improved export competitiveness due to softer exchange rates are providing some relief to manufacturing and external-oriented sectors.
• The Governing Council reaffirmed that future decisions will depend on an integrated assessment of incoming data—covering inflation trends, financial conditions, and the state of policy transmission. The Council emphasized that no pre-set path for rates exists; keeping all options open should the economic outlook shift markedly.
• Balance sheet reduction continues smoothly, with holdings under the APP and PEPP declining as reinvestments have ceased. The ECB confirmed that the pace of portfolio runoff remains in line with its previously communicated normalization plan, supporting a gradual withdrawal of monetary accommodation in a predictable manner.
• The next meeting is on 17 to 18 December 2025

Next 24 Hours Bias
Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news event

What can we expect from CHF today?

Today’s CHF tone is “steady‑firm within range”: spot sits near the middle of a well‑defined 0.79 — 0.81 USD/CHF corridor, with no fresh Swiss data shocks and the main catalysts lying ahead in the Fed and SNB meetings.​

The fundamental backdrop of zero inflation but no rush to ease, plus a structurally strong franc, continues to favor CHF resilience on rallies in USD/CHF toward 0.81 and leaves room for renewed downside tests toward 0.79 if the Fed delivers a dovish surprise

Central Bank Notes:

• The SNB maintained its key policy rate at 0% during its meeting on 25 September 2025, pausing a sequence of six consecutive rate cuts as inflation stabilized and the Swiss franc remained firm.
• Recent data showed a modest rebound in inflation, with Swiss consumer prices rising 0.2% year-on-year in August after staying above zero for three consecutive months; this helped alleviate fears of deflation that were mounting earlier in the year.
• The conditional inflation forecast remains broadly unchanged from June: headline inflation is expected to average 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027. The risk of a negative rate move has diminished for now, but the SNB retains flexibility should inflationary pressures weaken again.
• The global economic outlook has deteriorated further, weighed down by heightened trade tensions—especially with the U.S.—and ongoing uncertainty in key Swiss export markets.
• Swiss GDP growth moderated in Q2 after a strong Q1 boosted by front-loaded U.S. exports. The SNB expects growth to slow and remain subdued, with forecasted GDP expansion between 1% and 1.5% in both 2025 and 2026.
• Labor market sentiment in the Swiss industrial sector has softened on concerns over export competitiveness and potential adjustments to production, but the overall growth outlook stays broadly unchanged
• The SNB reiterated its readiness to respond as needed if deflation risks re-emerge, emphasizing its commitment to medium-term price stability and a robust, transparent communication policy, with the introduction of more detailed monetary policy minutes beginning in October.
• The next meeting is on 11 December 2025.

Next 24 Hours Bias
medium Bullish

The Pound (GBP)

Key news events today

No major news event

What can we expect from GBP today?

The Pound is starting the week on a firmer footing, trading comfortably above 1.33 against the U.S. dollar, with sentiment supported by expectations of easier global and UK policy but tempered by evidence of a still‑soft UK labour market. The GBP/USD rate was around 1.33 late last week, with one major data provider quoting 1.3319 on 5 December and noting that the Pound has gained roughly 1–1.5% over the past month and about 4–5% over the past year.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) met on 6 November 2025 and voted 7–2 to keep the Bank Rate unchanged at 4.00 percent for a second consecutive meeting. The decision reflects the Committee’s cautious approach as inflation remains above target, but underlying economic momentum continues to weaken. Two members maintained their votes for a 25-basis-point cut, citing further signs of labor-market softening and weak business sentiment.
• The BOE adjusted its guidance on quantitative tightening (QT), maintaining the reduced pace established in September. The planned reduction of UK government bond holdings remains at £67.5 billion over the next 12 months, leaving the current gilt balance near £550 billion. Policymakers described the recalibrated QT path as “appropriate for current market conditions,” emphasizing the importance of liquidity management amid heightened volatility.
• Headline inflation moderated slightly to 3.6 percent in October from 3.8 percent previously, driven by easing food and transport prices. However, core inflation has shown only gradual progress, holding near 3.9 percent. The MPC noted that services inflation and administered energy costs continue to exert pressure, highlighting the challenge of achieving the 2 percent target sustainably. The Committee’s latest projections see inflation falling toward 3 percent by mid-2026, with further downside expected if energy and wage dynamics continue to normalize.
• Economic activity remains subdued. Estimates place Q3 GDP growth close to zero, with both business output and consumer spending restrained. The unemployment rate has edged up to 4.8 percent, while pay growth cooled to just under 5 percent year-on-year. MPC members acknowledged that pay settlements are weakening further, signaling an easing in labor cost pressures as demand softens. Surveys from the manufacturing and services sectors suggest muted hiring intentions through year-end.
• International factors continue to complicate the policy outlook. Fluctuating oil prices—partly linked to renewed Middle East tensions—alongside fragile global demand have contributed to higher market volatility. The MPC reiterated that external shocks, including global food and energy disruptions, could temporarily slow the disinflation path but remain unlikely to derail the medium-term moderation in prices.
• The Committee assessed risks around inflation as balanced. Downside risks arise from sluggish domestic growth and declining real income momentum, while upside risks remain tied to elevated inflation expectations and stubborn services inflation. Policymakers emphasized the need for patience, maintaining that any rate cuts ahead of clear inflation progress could undermine confidence in policy credibility.
• The MPC’s overall stance remains restrictive but increasingly balanced, with future moves expected to follow a cautious, data-driven trajectory. The Committee reaffirmed that monetary policy will stay tight until there is compelling evidence that inflation is returning to the 2 percent target on a durable basis.
• The next meeting is on 18 December 2025.

  Next 24 Hours Bias
  Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news event

What can we expect from CAD today?

The Canadian dollar is starting the week firm after stronger‑than‑expected jobs data, recent USD softness, and support from oil prices, with markets focused on next week’s Bank of Canada decision and whether CAD strength can extend after a sharp USD/CAD drop. USD/CAD is trading around 1.38, having risen slightly to about 1.3822 on Monday after last week’s sharp decline.

Central Bank Notes:

• The Council noted that U.S. tariff tensions have eased slightly following early progress in bilateral discussions, though the external trade environment remains fragile. Businesses continue to hold back on long-term investment, with the Bank highlighting that sustained clarity on U.S. trade policy is needed to restore confidence.
• The Bank acknowledged that uncertainty persists despite the softer U.S. tone, as incoming data show limited improvement in export orders. The manufacturing sector has stabilized but remains below pre-2024 output levels, reflecting weak global demand and cautious corporate spending.
• Canada’s economy showed tentative signs of recovery in early Q4, with GDP estimated to expand by 0.3% in October after two quarters of contraction. Mining and energy activity strengthened modestly, aided by steady crude demand, while goods exports posted a fractional gain.
• Service sector growth remained uneven, supported mainly by tourism-related and technology services. However, retail spending and household consumption were subdued, constrained by slower job creation and lingering consumer caution. The Bank judged overall momentum as fragile but improving marginally.
• Housing activity showed modest reacceleration in major urban markets as mortgage rates stabilized near record lows. Nonetheless, affordability pressures and stricter lending standards continue to limit overall resale volumes, resulting in only a gradual recovery in the housing sector.
• Headline CPI inflation rose to 2.1% in October, reaching the Bank’s target for the first time in six months. Higher energy prices and a modest uptick in food and shelter costs drove the increase. Core inflation measures remained stable, suggesting underlying price pressures are contained.
• The Governing Council reiterated its data-dependent stance, indicating that the current policy rate remains appropriate amid tentative growth and balanced inflation risks. Officials noted that while additional stimulus is not ruled out, the emphasis has shifted toward monitoring the sustainability of the recovery rather than immediate rate adjustments.
• The next meeting is on 17 to 18 December 2025.

Next 24 Hours Bias
Medium Bullish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Oil is trading calmly near two‑week highs today, with WTI around 60 USD and Brent just under 64 USD per barrel in Monday’s Asian and early European trade on 8 December 2025. The tape reflects a market balanced between expected Fed easing (supportive for demand) and elevated geopolitical risks to Russian and Venezuelan supply (supportive for prices), against a still-comfortable overall supply backdrop.

Next 24 Hours Bias
Medium Bullish

The post IC Markets Gobal – Europe Fundamental Forecast | 08 December 2025 first appeared on IC Markets | Official Blog.