IC Markets Global – Asia Fundamental Forecast | 23 December 2025

IC Markets Global – Asia Fundamental Forecast | 23 December 2025

What happened in the U.S. session?

Over the latest U.S. session, markets digested a relatively light but still meaningful macro docket centered on durable goods data, updated GDP figures, and consumer sentiment, alongside incremental headlines around year‑end Fed policy expectations and equity rotation. Durable goods orders surprised to the upside versus consensus, while revisions to quarterly GDP remained consistent with a solid but not overheating growth backdrop, and consumer confidence hovered near prior levels, reinforcing the narrative of a moderating yet resilient U.S. economy into year‑end.

What does it mean for the Asia Session?

Asian traders face a dense macro slate in a thin, year‑end market, led by the final US Q3 GDP estimate, October durable goods orders, and December Conference Board consumer confidence, all of which will reset expectations for the Fed’s 2026 easing path and drive USD, rates, and equity futures into the Asia evening. Canada’s October GDP and the Bank of Canada’s deliberations, together with final November machine tool orders from Japan, add further cues on global growth and manufacturing, feeding into risk sentiment for export‑heavy Asian markets.

The Dollar Index (DXY)

Key news events today

ADP Weekly Employment Change (Tentative)

Prelim GDP q/q (1L30 pm GMT)

Core Durable Goods Orders m/m (1:30 pm GMT)

Durable Goods Orders m/m (1:30 pm GMT)

Prelim GDP Price Index q/q (1:30 pm GMT)

CB Consumer Confidence (3:00 pm GMT)

Richmond Manufacturing Index (3:00 pm GMT)

What can we expect from DXY today?

The Dollar is trading weaker overall, extending its December slide as markets continue to price in easier Federal Reserve policy and digest softer U.S. inflation data, while pre‑holiday liquidity keeps intraday ranges relatively contained. The U.S. Dollar Index (DXY) is hovering in the high‑98 area after falling sharply following the Fed’s mid‑December rate cut, leaving it around 9% lower year‑to‑date and near the bottom of its 12‑month range.

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 of 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)

Prelim GDP q/q (1L30 pm GMT)

Core Durable Goods Orders m/m (1:30 pm GMT)

Durable Goods Orders m/m (1:30 pm GMT)

Prelim GDP Price Index q/q (1:30 pm GMT)

CB Consumer Confidence (3:00 pm GMT)

Richmond Manufacturing Index (3:00 pm GMT)

What can we expect from Gold today?

Gold is trading near fresh record highs above the 4,400 USD/oz area going into Tuesday, with momentum still bullish but increasingly stretched after a powerful December impulse rally. The move is being driven by expectations of easier Federal Reserve policy, heavy central‑bank and safe‑haven demand, and ongoing geopolitical tensions, which have helped push year‑to‑date gains to roughly 70% and keep spot prices sitting well above key moving averages and prior cycle highs.

Next 24 Hours Bias
Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news event

What can we expect from AUD today?

The Australian Dollar (AUD) has shown resilience amid mixed global cues, trading around 0.6620-0.6640 against the USD as of late December 22, 2025 (noting the query date of December 23 aligns with Australian time zones ahead of PST), buoyed by elevated consumer inflation expectations at 4.7% that fuel speculation of a Reserve Bank of Australia (RBA) rate hike. Traders anticipate the RBA’s December 9 policy meeting minutes due Tuesday, December 23, which held the cash rate at 3.6% and could clarify hawkish leanings amid persistent inflation pressures, potentially supporting further AUD gains if dovish US Fed expectations weaken the USD.

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

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news event

What can we expect from NZD today?

The New Zealand dollar is trading modestly firmer against the US dollar around the mid‑0.57 area, extending a gradual recovery seen over the past month as markets digest improving domestic growth data and a steady policy outlook from the Reserve Bank of New Zealand (RBNZ). Sentiment toward the Kiwi is being underpinned by confirmation that New Zealand’s economy returned to growth in Q3, which has helped the currency gain roughly 2.8% over the last month against the USD.

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

No major news event

What can we expect from JPY today?

The Japanese yen is trading slightly stronger at the start of the week as verbal intervention from Japanese authorities and safe‑haven demand partially offset recent post‑BoJ selling, with USD/JPY pulling back from the 158 area toward the mid‑156s. After the Bank of Japan’s December meeting, where it raised its policy rate to 0.75% the highest in about 30 years, but signalled only gradual further tightening, markets continued to sell the yen and pushed USD/JPY above 158, treating the hike as largely priced in and remaining focused on still‑wide yield differentials with the US.

Central Bank Notes:

• The Policy Board of the Bank of Japan will meet on 18–19 December with markets almost fully pricing a 25-basis-point hike, which would raise the short-term policy rate from 0.50% to around 0.75%, as the bank moves further away from its ultra-loose stance while stressing that any tightening will remain gradual and data-dependent.
• The BOJ is expected to continue guiding the uncollateralized overnight call rate in a narrow band around the new policy rate, near 0.75%, while signaling that the pace and timing of any additional hikes will depend on how past increases affect bank lending, corporate financing conditions, and overall economic activity.
• The quarterly path of JGB purchases remains on a pre-announced, gradual taper: outright purchases are being reduced by about ¥400 billion per quarter through March 2026, then by roughly ¥200 billion per quarter from April to June 2026, with the bank still aiming for JGB purchases to settle near ¥2 trillion in Q1 2027 and retaining flexibility to adjust the pace if market functioning or yield volatility deteriorate.
• Japan’s economy has softened in the near term, with Q3 2025 GDP contracting at an annualized pace of about 2.3% as weaker residential investment and external demand weighed on activity, even as business sentiment in manufacturing has recently improved to a roughly four-year high.
• Core consumer inflation (excluding fresh food) accelerated to around 3.0% year-on-year in October, up from 2.9% in September and remaining above the BOJ’s 2% target, while the “core-core” measure excluding both fresh food and energy rose to about 3.1%, underscoring persistent underlying price pressures.
• In the very near term, some input-cost pressures are easing as earlier import price surges fade, but services inflation linked to labor shortages, along with steady wage gains, continues to support broader price momentum; firms’ and households’ medium-term inflation expectations remain anchored slightly above 2%, keeping short-term inflation risks tilted to the upside.
• For the coming quarters, the BOJ assesses that real growth will likely run below potential as the economy digests tighter financial conditions and past yen depreciation, though accommodative real rates, positive real wage growth, and improving corporate sentiment should help sustain a modest recovery in private consumption and business investment.
• Over the medium term, as overseas demand stabilizes and domestic labor markets remain tight, the BOJ expects wage settlements and inflation expectations to keep core inflation on a gradual upward trajectory around or slightly above 2%, providing room for further cautious rate normalization as long as financial conditions remain supportive and the recovery is not derailed.
• The next meeting is scheduled for 22 to 23 January 2026.

Next 24 Hours Bias

Strong Bearish

Oil

Key news events today

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Oil is rebounding after a sharp slide this year, with CFD benchmarks showing WTI near 57–58 USD/bbl and Brent around 61–62 USD/bbl, still roughly 16–18% lower than the same time in 2024 as surplus supply and a “cartoonishly oversupplied” market cap rally. The latest move up is driven by the U.S. interception of a Venezuela‑linked tanker and ongoing Russia–Ukraine war risks, which have pushed Brent to about 61.8 USD and WTI to roughly 57.8 USD on Monday, raising concern about possible supply disruptions.

Next 24 Hours Bias
Medium Bearish

The post IC Markets Global – Asia Fundamental Forecast | 23 December 2025 first appeared on IC Markets | Official Blog.