IC Markets Global – Europe Fundamental Forecast | 16 December 2025

IC Markets Global – Europe Fundamental Forecast | 16 December 2025

What happened in the Asia session?
Asian markets traded defensively on December 16, 2025, with equities like Nikkei and Kospi leading losses (down ~1%) due to Wall Street rotation and pending US data, alongside softer NZ spending and awaited India PMIs; yen and gold gained while AUDUSD weakened. The Nikkei 225 dropped 1.27% (basic materials and real estate sectors were hit hardest), while the Kospi fell 0.75-1.13%. Additionally, GIFT Nifty futures declined 0.10%. Yen strengthened notably ahead of BOJ, AUDUSD slipped 0.2% to 0.6639 post-Australia’s softer PMI, while gold steadied as a haven.

What does it mean for the Europe & US sessions?
As European and U.S. sessions open, trading remains cautious with sparse data focusing on ECB updates and minor U.S. inventories, while eyes fix on Tuesday’s delayed U.S. retail sales and jobs report, plus Thursday’s ECB meeting expected to hold rates at 2%. Positive European equity momentum persists amid bank strength and global policy hopes, but dollar volatility looms from U.S. figures.

The Dollar Index (DXY)

Key news events today

ADP Weekly Employment Change (Tentative)

Average Hourly Earnings m/m (1:30 pm GMT)

Core Retail Sales m/m (1:30 pm GMT)

Non-Farm Employment Change (1:30 pm GMT)

Retail Sales m/m (1:30 pm GMT)

Unemployment Rate (1:30 pm GMT)

Flash Manufacturing PMI (2:45 pm GMT)

Flash Services PMI (2:45 pm GMT)

What can we expect from DXY today?

On Tuesday, the US dollar remained defensive near multi-month lows, with the DXY index dipping to 98.26 as markets braced for long-delayed October-November jobs data at 8:30 a.m. ET, delayed by the longest US government shutdown on record; this follows a recent Fed rate cut to 3.50-3.75% and signals of more easing, amplifying year-to-date losses exceeding 9% amid cooling labor indicators and falling Treasury yields.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) is widely expected to lower the federal funds rate target range by 25 basis points to 3.50%–3.75% at its December 9–10, 2025, meeting, marking the third consecutive cut after the October reduction to 3.75%–4.00%
• The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market showing further softening as the unemployment rate rose to 4.4% in September 2025 amid modest job gains.
• Officials note persistent downside risks to growth alongside resilient activity, with inflation easing to 3.0% year-over-year CPI in September but remaining elevated due to tariff effects; core PCE stands at around 2.8% as of October.
• Economic activity grew at a 3.8% annualized pace in Q2 2025 per revised estimates, though Q3 and Q4 face headwinds from trade tensions, fiscal restraint, and data disruptions like the government shutdown.
• September’s Summary of Economic Projections forecasts 2025 unemployment at a median 4.5%, with PCE inflation near 3.0% and core PCE at 3.1%, signaling a gradual disinflation path; updates expected on December 10 may adjust for higher unemployment and lower growth.
• The Committee maintained its data-dependent approach, noting a softening labor market and inflation above the 2% target, while deciding to lower the federal funds rate target range by 25 basis points to 3.50%-3.75%. Dissent persisted, with multiple members opposing the cut or advocating for a hold, reflecting divisions similar to recent meetings.​
• The FOMC confirmed the conclusion of its quantitative tightening program effective December 1, 2025, with Treasury rolloff caps at $5 billion per month and agency MBS caps at $35 billion per month to ensure ample reserves and market stability.
• The next meeting is scheduled for  27 to 28 January 2026.

Next 24 Hours Bias
Medium Bearish

Gold (XAU)

Key news events today

ADP Weekly Employment Change (Tentative)

Average Hourly Earnings m/m (1:30 pm GMT)

Core Retail Sales m/m (1:30 pm GMT)

Non-Farm Employment Change (1:30 pm GMT)

Retail Sales m/m (1:30 pm GMT)

Unemployment Rate (1:30 pm GMT)

Flash Manufacturing PMI (2:45 pm GMT)

Flash Services PMI (2:45 pm GMT)

Empire State Manufacturing Index (1:30 pm GMT)

What can we expect from Gold today?

Gold is trading a little above 4,300 USD/oz today, Tuesday, hovering near record highs as investors continue to rotate toward safe‑haven assets and away from risk amid a softer dollar and lower real yields. The dominant narrative is that expectations for further US Federal Reserve rate cuts in 2026, combined with ongoing macro and geopolitical uncertainty, are underpinning strong bullion demand and encouraging buy‑on‑dip behavior from both traders and longer‑term allocators.

Next 24 Hours Bias   
Medium Bullish

The Euro (EUR)

Key news events today

French Flash Manufacturing PMI (8:15 am GMT

French Flash Services PMI (8:15 am GMT)

German Flash Manufacturing PMI (8:30 am GMT)

German Flash Services PMI (8:30 am GMT)

What can we expect from EUR today?

On Tuesday, the euro is consolidating near recent highs against the U.S. dollar, with EUR/USD hovering in the mid‑1.17s after a strong 12‑month run, but short‑term trading is choppy as the pair stalls below key resistance around 1.18. A stable macro backdrop in the euro area with inflation slightly above 2% and modest but resilient growth supports expectations that the ECB will keep rates unchanged, while continuing balance‑sheet runoff.

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?

The Swiss franc remains one of the strongest major currencies going into Tuesday, 16 December 2025, with USD/CHF consolidating just under 0.80 and EUR/CHF near recent lows after the SNB kept its policy rate at 0% last week and slightly upgraded its growth outlook while signaling readiness to intervene in FX markets if needed. Persistently weak producer and import prices highlight ongoing deflationary pressure, but with inflation viewed as contained and the franc still in demand as a safe‑haven asset, markets expect the SNB to keep rates unchanged for an extended period and manage the currency mainly through interventions rather than renewed negative rates.​

Central Bank Notes:

• At its 11 December 2025 monetary policy assessment, the Swiss National Bank (SNB) is widely expected to leave the policy rate unchanged at 0%, extending the pause that began in September as the Governing Board judges that current settings are sufficient to keep inflation near, but still below, its target while avoiding an unnecessary move into negative rates.
• Recent data show that the tentative rebound in Swiss inflation has stalled, with headline CPI easing from 0.1% year‑on‑year in October to 0.0% in November and core inflation slipping to about 0.4%, reinforcing the view that underlying price pressures remain very weak and that deflation risks, while contained, have not fully disappeared.
• The SNB’s conditional inflation forecast is likely to remain close to the September projections, with inflation still seen averaging roughly 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027 under an unchanged policy rate path, though the latest CPI prints argue for a slightly lower near‑term profile and keep open the option of renewed easing if activity or prices weaken further.
• The global backdrop has deteriorated further, as continuing U.S. tariff actions and softer external demand weigh on world trade, while uncertainty in key European and U.S. markets for Swiss exports persists, leaving the SNB cautious about the growth outlook despite Switzerland’s relatively resilient domestic demand.
• Business and labor‑market sentiment in export‑oriented manufacturing remains subdued, with firms reporting pressure on margins from the still‑strong franc and softer foreign orders, although the broader economy is still expected to grow at around 1–1.5% in 2025 and unemployment only drifting up gradually from low levels.
• The SNB continues to stress its willingness to act if deflation risks re‑emerge, reiterating that it can ease policy through renewed rate cuts or targeted foreign‑exchange intervention if necessary, while also highlighting its commitment to transparent communication, including the publication of detailed minutes from recent assessments and ongoing dialogue with international partners on FX policy

The next meeting is on 19 March 2026.

Next 24 Hours Bias
Medium Bullish

The Pound (GBP)

Key news events today

Claimant Count Change (7:00 am GMT)

Average Earnings Index 3m/y (7:00 am GMT)

Flash Manufacturing PMI (9:30 am GMT)

Flash Services PMI (9:30 am GMT)

What can we expect from GBP today?

Today, Tuesday, the pound is trading broadly sideways just above the mid‑1.33s against the dollar, consolidating after recent gains and an 8‑week high last week. Markets are focused on UK labour‑market data due this morning and the approaching BoE meeting, where a 25 bp rate cut is almost fully priced following weak October GDP and softer‑than‑expected inflation, which together are capping sterling’s upside.

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 Bullish

The Canadian Dollar (CAD)

Key news events today

BOC Gov Macklem Speaks (5:45 pm GMT)

What can we expect from CAD today?

The Canadian dollar is slightly softer on the day but continues to trade near its strongest levels in about three months, with USD/CAD hovering around 1.377–1.378 as markets mark time ahead of key US labor and activity data releases later today. The recent CAD strength reflects a combination of a softer US dollar on growing Fed‑cut expectations, relatively resilient Canadian growth, and inflation that is close enough to target for the Bank of Canada to pause while still sounding somewhat more hawkish than the Fed at the margin.
​
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

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Oil markets are on the back foot today as traders fade geopolitical risk and refocus on a looming supply overhang. Brent and WTI are extending Monday’s declines, trading near 60 and 56 USD respectively, with price action driven by improving odds of a Russia‑Ukraine ceasefire, which could normalize Russian exports, alongside softer China data that undercuts the demand outlook. Against a backdrop where OPEC is signaling steady demand but the IEA warns of a sizable 2026 surplus, rallies are being sold, and the curve reflects a market wrestling with record or near‑record demand but even faster supply growth, keeping crude pinned near multi‑year lows for now.

Next 24 Hours Bias
Medium Bearish

The post IC Markets Global – Europe Fundamental Forecast | 16 December 2025 first appeared on IC Markets | Official Blog.