Global Markets:

•  Asian Stock Markets : Nikkei up 0.04%, Shanghai Composite up 0.52%, Hang Seng up 0.62% ASX up 0.42%
• Commodities : Gold at $3395.35 (-0.9%), Silver at $33.58 (-0.49%), Brent Oil at $62.8 (0.9%), WTI Oil at $59.7 (1.19%)
• Rates : US 10-year yield at 4.307, UK 10-year yield at 4.5120, Germany 10-year yield at 2.5315

News & Data:

• (USD) Trade Balance  -140.5B  to -136.8B  expected
• (CAD) Trade Balance  -0.5B  to -1.7B  expected

Markets Update:

Hong Kong markets led gains in the Asia-Pacific region, with the Hang Seng index rising 2.07% following announcements from China’s central bank and financial regulators to cut key interest rates. These sweeping measures aim to support economic growth amid ongoing trade tensions. Mainland China’s CSI 300 index also saw a boost, gaining 1.01%.

Other major Asian markets largely followed suit. Japan’s Nikkei 225 climbed 0.22% while the broader Topix rose 0.38%. South Korea’s Kospi added 0.32%, although the small-cap Kosdaq slipped by 0.7%. In Australia, the S&P/ASX 200 advanced 0.17%, reflecting cautious optimism across the region.

Market sentiment was lifted further by news that U.S. Treasury Secretary Scott Bessent and trade representative Jamieson Greer are scheduled to meet Chinese officials in Switzerland to address trade and economic tensions. This development could mark a turning point after former President Trump recently raised tariffs on Chinese goods to 145%, prompting China to retaliate with heavy tariffs of its own.

In currency markets, several Asian currencies strengthened against the U.S. dollar amid waning investor confidence in the greenback. “There’s a clear dislocation in the USD’s usual trading behavior,” said Peter Kinsella of Union Bancaire Privee, adding that global investors are reducing exposure to dollar-denominated assets. Meanwhile, U.S. stock futures advanced ahead of the Federal Reserve’s upcoming interest rate decision. Dow futures rose 280 points (0.7%), S&P 500 futures gained 0.8%, and Nasdaq 100 futures jumped 1%. Despite this, all three major U.S. indices closed lower in the previous session.

Upcoming Events: 

• 06:00 PM GMT – USD Federal Funds Rate
• 06:00 PM GMT – USD FOMC Statement
• 06:00 PM GMT – USD FOMC Press Conference

The post Wednesday 7th May 2025: Asia-Pacific Markets Rally as China Cuts Rates and Trade Talks Resume first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bullish

Overall momentum of the chart: Bearish

Price could potentially make a bullish continuation toward the 1st resistance. Additionally, the price is above the Ichimoku Cloud, which adds further significance to the strength of the bullish momentum.

Pivot: 99.37

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 97.98

Supporting reasons: Identified as a swing low support, indicating a potential area where the price could stabilize once again.

1st resistance: 101.34
Supporting reasons: Identified as a pullback resistance that aligns with the 61.8% Fibonacci retracement, indicating a potential level that could cap further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation toward the 1st support.

Pivot: 1.1384

Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify. Additionally, the price is below the Ichimoku Cloud, which adds further significance to the strength of the bearish momentum.

 1st support: 1.1145
Supporting reasons: Identified as a pullback support that aligns close to the 61.8% Fibonacci retracement, indicating a potential area where the price could stabilize once more.

1st resistance: 1.1567

Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation toward the 1st support

Pivot: 164.55

Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area where selling pressures could intensify.

1st support: 160.49
Supporting reasons: Identified as a pullback support that aligns with the 61.8% Fibonacci retracement, indicating a potential area where the price could stabilize once again.

1st resistance: 166.59
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish bounce off this level to rise toward the 1st resistance. 

Pivot: 0.8461

Supporting reasons: Identified as a pullback support that aligns close to the 61.8% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 0.8374
Supporting reasons: Identified as a pullback support, indicating a potential area where the price could stabilize once more.

1st resistance: 0.8556
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

GBP/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish break below the pivot and fall toward the 1st support.

Pivot: 1.3338

Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 1.3207
Supporting reasons: Identified as an overlap support, acting as a potential level where the price could stabilize once again.

1st resistance: 1.3443
Supporting reasons: Identified as a swing high resistance, indicating a potential level that could cap further upward movement.

GBP/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance. Additionally, the price is above the Ichimoku Cloud, which adds further significance to the strength of the bullish momentum.

Pivot: 190.09

Supporting reasons: Identified as an overlap support that aligns close to the 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 187.68

Supporting reasons: Identified as a multi-swing low support that aligns close to the 61.8% Fibonacci retracement, indicating a potential level where the price could stabilize once more.

1st resistance: 193.70
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could potentially make a bullish continuation toward the 1st resistance. 

Pivot: 0.8218

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 0.8120
Supporting reasons: Identified as a pullback support, indicating a potential level where the price could stabilize once again.

1st resistance: 0.8373
Supporting reasons: Identified as a pullback resistance, indicating a potential level that could cap further upward movement.

USD/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could rise toward the pivot and potentially make a bearish reversal off this level to fall toward the 1st support.

Pivot: 143.800

Supporting reasons: Identified as a pullback resistance that aligns with the 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 141.64
Supporting reasons: Identified as a pullback support, suggesting a potential area where the price could stabilize once more.

1st resistance: 145.78
Supporting reasons: Identified as a pullback resistance, indicating a potential level that could cap further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Neutral

Price could rise toward the pivot and potentially make a bearish reversal off this level to fall toward the 1st support.

Pivot: 1.3896

Supporting reasons: Identified as a multi-swing-high resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify. The presence of the red Ichimoku Cloud adds further significance to the strength of the bearish momentum.

1st support: 1.3760
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where the price could stabilize once more.

1st resistance: 1.3972
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 0.6430
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 0.6340

Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, suggesting a potential area where the price could stabilize once again.

1st resistance: 0.6545
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could rise toward the pivot and potentially make a bearish reversal off this level to pull back toward the 1st support.

Pivot: 0.6024
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area where selling pressures could intensify.

1st support: 0.5887

Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, suggesting a potential area where the price could stabilize once more.

1st resistance: 0.6112

Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 40,673.70

Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 39,200.50

Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 42,165.30

Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

DE40 (DAX):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 22,723.90
Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 22,083.20

Supporting reasons: Identified as an overlap support, indicating a key level where the price could stabilize once more.

1st resistance: 23,438.30
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 5,434.40

Supporting reasons: Identified as a swing-low support, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 5,322.55

Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 5,780.15

Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 92,463.38
Supporting reasons: Identified as an overlap support that aligns with a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 88,428.80
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where the price could stabilize once more.

1st resistance: 97,500.18
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 1,740.75
Supporting reasons: Identified as a multi-swing-low support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 1,669.20
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 1,913.71
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could rise toward the pivot and potentially make a bearish reversal off this level to fall toward the 1st support.

Pivot: 59.48

Supporting reasons: Identified as a swing-high resistance, indicating a potential area where selling pressures could intensify. The presence of the red Ichimoku Cloud adds further significance to the strength of the bearish momentum.

1st support: 55.83
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where the price could stabilize once more.

1st resistance: 61.86
Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish bounce off the pivot and rise toward the 1st resistance.

Pivot: 3348.29

Supporting reasons: Identified as a pullback support that aligns close to the 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 3260.33
Supporting reasons: Identified as a pullback support, acting as a potential level where price could stabilize once again.

1st resistance: 3489.69
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

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The post Wednesday 7th May 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 7 May 2025

What happened in the Asia session?

During his press conference in Wellington this morning, newly appointed Reserve Bank of New Zealand (RBNZ) Governor Christian Hawkesby warned of increased risk on the back of U.S. tariffs but stated that financial institutions are well-placed to support households and businesses. He also noted that domestic economic activity remained weak as previously high interest rates, rising unemployment and a weak housing market weighed on demand. After rising above the threshold of 0.6000 overnight, the Kiwi lost steam as it pulled back under 0.5990 by midday in Asia.

What does it mean for the Europe & US sessions?

After declining sharply in January and stagnating in February, factory orders in Germany are now expected to rise 1.4% MoM. This data will set the early tone for the Euro, but the FOMC meeting and press conference will be the main drivers for this currency pair.

Construction activity in the U.K. has contracted over the past three months as civil engineering was the weakest-performing sector, plunging to 38.8 – its steepest decline since October 2020, while residential construction continued to shrink as well. This sector looks set to notch a fourth successive month of weaker output, a result that could weigh on the pound during the European trading session.

The Dollar Index (DXY)

Key news events today

FOMC Interest Rate Decision (6:00 pm GMT)

FOMC Press Conference (6:30 pm GMT)

What can we expect from DXY today?

Demand for the greenback could re-ignite today, potentially triggering a short squeeze if the Federal Reserve conveys a hawkish outlook during the FOMC meeting. All eyes will also be on Fed Chair Jerome Powell, whose remarks are likely to fuel the direction for the DXY later on Wednesday.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 19 March 2025
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run but uncertainty around the economic outlook has increased; the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
• Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
• The next meeting is scheduled for 6 to 7 May 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

FOMC Interest Rate Decision (6:00 pm GMT)

FOMC Press Conference (6:30 pm GMT)

What can we expect from Gold today?

Gold pulled back during early trading on Wednesday as spot prices fell toward $3,370/oz, with traders reluctant to position aggressively ahead of today’s FOMC meeting. A hawkish outcome could weigh on prices, with profit-taking for this precious metal picking up.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie climbed above the threshold of 0.6500 on Tuesday and it is likely to remain elevated until the FOMC meeting later today. Risk is skewed to the downside, especially if Federal Reserve Chairman Jerome Powell projects a hawkish stance during his press conference.

Central Bank Notes:

• The RBA maintained the cash rate at 4.10% on 1 April, following a 25-basis point reduction on 18 February.
• Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance.
• Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February Statement on Monetary Policy.
• Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress. However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.
• At the same time, a range of indicators suggest that labour market conditions remain tight. Despite a decline in employment in February, measures of labour underutilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers. Wage pressures have eased a little more than expected but productivity growth has not picked up and growth in unit labour costs remains high.
• There are notable uncertainties about the outlook for domestic economic activity and inflation. The central projection is for growth in household consumption to continue to increase as income growth rises. But there is a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market than currently expected.
• Uncertainty about the outlook abroad also remains significant. On the macroeconomic policy front, recent announcements from the U.S. on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures. Geopolitical uncertainties are also pronounced.
• The Board’s assessment is that monetary policy remains restrictive and the continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the Board is cautious about the outlook.
• The Board will rely upon the data and the evolving assessment of risks to guide its decisions and is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome.
• The next meeting is on 20 May 2025.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

RBNZ Gov Hawkesby’s Speech (1:00 am GMT)

What can we expect from NZD today?

During his press conference in Wellington this morning, newly appointed Reserve Bank of New Zealand (RBNZ) Governor Christian Hawkesby warned of increased risk on the back of U.S. tariffs but stated that financial institutions are well-placed to support households and businesses. He also noted that domestic economic activity remained weak as previously high interest rates, rising unemployment and a weak housing market weighed on demand. After rising above the threshold of 0.6000 overnight, the Kiwi lost steam as it pulled back under 0.59900 by midday in Asia.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 25 basis points bringing it down to 3.50% on 9 April, marking the fifth consecutive rate cut.
• The Committee assessed that annual consumer price inflation remains near the midpoint of the MPC’s 1 to 3% target band while firms’ inflation expectations and core inflation are consistent with inflation remaining at target over the medium term.
• Economic activity has evolved largely as expected since the February Monetary Policy Statement; higher-than-expected export prices and a lower exchange rate have supported primary sector incomes and overall economic growth.
• Although monetary restraint had been removed at pace, household spending and residential investment have remained weak.
• The recently announced increases in global trade barriers weaken the outlook for global economic activity. On balance, these developments create downside risks to the outlook for economic activity and inflation.
• The Committee noted that the increase in tariffs will take time to work through the global economy, but the direct price increases for economies imposing tariffs and the dampening impact of increased economic uncertainty on global demand will occur relatively quickly.
• With CPI inflation close to the mid-point of the target range, significant spare capacity in the economy, and a weaker activity outlook stemming from global trade policy, the Committee agreed that a further reduction in the OCR was appropriate.
• Meanwhile, future policy decisions will be determined by the outlook for inflationary pressure over the medium term.
• The next meeting is on 28 May 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?

With demand for safe-haven assets such as the yen fading, USD/JPY steadied around 142.30 in early trading on Wednesday before rising above 143 at the beginning of the Asia session. This currency pair could remain lifted today, especially if the Federal Reserve projects a hawkish stance during the FOMC meeting.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 1 May, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
• Japan’s economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors, although factors such as accommodative financial conditions are expected to provide support. Thereafter, Japan’s economic growth rate is likely to rise, with overseas economies returning to a moderate growth path.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be in the range of 2.0-2.5% for fiscal 2025, in the range of 1.5-2.0% for fiscal 2026, and at around 2% for fiscal 2027. The effects of the past rise in import prices and of the recent rise in food prices such as rice prices – these factors have pushed up the inflation rate so far – are expected to wane.
• Meanwhile, underlying CPI inflation is likely to be sluggish, mainly due to the deceleration in the economy. Thereafter, however, underlying CPI inflation is expected to increase gradually.
• Regarding the employment and income situation, despite the deceleration in the economy, labour market conditions are likely to remain tight, as it will become more difficult for labour supply of women and seniors to increase.
• Comparing the projections through fiscal 2026 with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rate for fiscal 2024 is somewhat higher, but the projected growth rates for fiscal 2025 and 2026 are lower due to the effects of trade and other policies in each jurisdiction.
• There are various risks to the outlook. In particular, it is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them. It is therefore necessary to pay due attention to the impact of these developments on financial and foreign exchange markets and on Japan’s economic activity and prices.
• With regard to the risk balance, risks to economic activity are skewed to the downside for fiscal 2025 and 2026. Risks to prices are also skewed to the downside for fiscal 2025 and 2026.
• The next meeting is scheduled for 17 June 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

Germany Factory Orders (6:00 am GMT)

What can we expect from EUR today?

After declining sharply in January and stagnating in February, factory orders in Germany are now expected to rise 1.4% MoM. This data will set the early tone for the Euro, but the FOMC meeting and press conference will be the main drivers for this currency pair.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17 April to mark the sixth successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.40%, 2.65% and 2.25% respectively.
• The disinflation process is well on track with both headline and core inflation declining in March while services inflation has also eased markedly over recent months. Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Wage growth is moderating, and profits are partially buffering the impact of still elevated wage growth on inflation. The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions.
• Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area.
• The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.
• In particular, the Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.
• The next meeting is on 5 June 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

During his speech at “The Central Banking Dialogue” in Zurich on Tuesday, Swiss National Bank (SNB) Governing Board Chairman Martin Schlegel stated that the central bank is ready to intervene in the foreign currency markets and cut interest rates even below zero to prevent inflation falling below its price stability target. Swiss inflation fell to 0% in April, its lowest level in four years, data showed on Monday.  This latest result comes in at the bottom end of the SNB’s 0 to 2% target range, fuelling expectations that the SNB will cut rates from the current 0.25% at its next policy meeting on June 19, while markets expect rates could go below zero later in the year. The Swiss franc could weaken in the coming weeks, especially if the Federal Reserve projects a hawkish stance during Wednesday’s FOMC meeting.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
• Underlying inflationary pressure has decreased further this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
• In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
• GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
• The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

S&P Global Construction PMI (8:30 am GMT)

What can we expect from GBP today?

Construction activity in the U.K. has contracted over the past three months as civil engineering was the weakest-performing sector, plunging to 38.8 – its steepest decline since October 2020, while residential construction continued to shrink as well. This sector looks set to notch a fourth successive month of weaker output, a result that could weigh on the pound during the European trading session.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain the Bank Rate at 4.50% on 19 March 2025, while one member preferred to reduce it by 25 basis points (bps).
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation increased to 3.0% in January from 2.5% in December, slightly higher than expected in the February Report; domestic price and wage pressures are moderating, but remain somewhat elevated.
• Although global energy prices have fallen back recently, they remain higher than last year and CPI inflation is still projected to rise to around 3.75% in 2025 Q3. While CPI inflation is expected to fall back thereafter, the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.
• While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.
• The labour market had continued to ease, although it was still judged to be broadly in balance – some indicators of employment intentions had deteriorated markedly, to levels consistent with shrinking employment while other indicators, such as the number of vacancies, had not weakened to the same extent.
• Domestic price and wage pressures were moderating, but remained somewhat elevated. A range of indicators suggested that underlying pay growth had eased further in recent months, although annual growth in private sector regular average weekly earnings had picked up to 6.1% in the three months to January.
• Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 8 May 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

With no major data due for release today, the Loonie will take its cue from U.S. oil inventory data  but the main driver would be the FOMC meeting and press conference by Federal Reserve Chairman Jerome Powell that will take place later today.

Central Bank Notes:

• The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% – marking the first pause after seven consecutive meetings where rates were reduced.
• The major shift in direction of U.S. trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations.
• Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally – the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy.
• In the first scenario, uncertainty is high but tariffs are limited in scope – Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year.
• Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the U.S., the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the Euro Area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.
• In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.
• The Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs while proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
• Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war and the Governing Council will focus on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval by supporting economic growth while ensuring that inflation remains well-controlled.
• The next meeting is on 4 June 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

Crude oil prices rebounded strongly on Tuesday on signs of weakening production in the U.S. and higher demand in Europe and China. WTI oil jumped 3.4% on Tuesday, hitting an overnight high of $59.84. In addition, the API stockpiles declined more than originally anticipated, as 4.5M barrels of crude were removed from storage, easily exceeding the forecast of 2.5M draw. Should the EIA inventories point result in a high drawdown, this commodity could experience robust tailwinds later today.

Next 24 Hours Bias

Medium Bullish

The post IC Markets Europe Fundamental Forecast | 7 May 2025 first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 7 May 2025

What happened in the U.S. session?

Markets were primarily driven by trade policy concerns, corporate earnings, and anticipation of Federal Reserve actions. The U.S. trade deficit reached a record high of $141B due to a surge in imports ahead of President Donald Trump’s sweeping tariffs, contributing to a first-quarter GDP decline – the first contraction since 2022. Businesses accelerated imports to stockpile goods before the implementation of new tariffs, exacerbating the trade imbalance, pulling GDP into negative territory to signal economic strain. The dollar index (DXY) fell to an overnight low of 99.17 before stabilising around 99.50 as Asian markets came online on Wednesday.

What does it mean for the Asia Session?

Newly appointed Reserve Bank of New Zealand (RBNZ) Governor Christian Hawkesby will be holding a press conference on the Financial Stability Report in Wellington where his remarks are likely to drive the direction for the Kiwi during this session.

The Dollar Index (DXY)

Key news events today

FOMC Interest Rate Decision (6:00 pm GMT)

FOMC Press Conference (6:30 pm GMT)

What can we expect from DXY today?

Demand for the greenback could re-ignite today, potentially triggering a short squeeze if the Federal Reserve conveys a hawkish outlook during the FOMC meeting. All eyes will also be on Fed Chair Jerome Powell, whose remarks are likely to fuel the direction for the DXY later on Wednesday.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 19 March 2025
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run but uncertainty around the economic outlook has increased; the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
• Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
• The next meeting is scheduled for 6 to 7 May 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

FOMC Interest Rate Decision (6:00 pm GMT)

FOMC Press Conference (6:30 pm GMT)

What can we expect from Gold today?

Gold pulled back during early trading on Wednesday as spot prices fell toward $3,370/oz, with traders reluctant to position aggressively ahead of today’s FOMC meeting. A hawkish outcome could weigh on prices, with profit-taking for this precious metal picking up.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie climbed above the threshold of 0.6500 on Tuesday and it is likely to remain elevated until the FOMC meeting later today. Risk is skewed to the downside, especially if Federal Reserve Chairman Jerome Powell projects a hawkish stance during his press conference.

Central Bank Notes:

• The RBA maintained the cash rate at 4.10% on 1 April, following a 25-basis point reduction on 18 February.
• Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance.
• Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February Statement on Monetary Policy.
• Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress. However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.
• At the same time, a range of indicators suggest that labour market conditions remain tight. Despite a decline in employment in February, measures of labour underutilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers. Wage pressures have eased a little more than expected but productivity growth has not picked up and growth in unit labour costs remains high.
• There are notable uncertainties about the outlook for domestic economic activity and inflation. The central projection is for growth in household consumption to continue to increase as income growth rises. But there is a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market than currently expected.
• Uncertainty about the outlook abroad also remains significant. On the macroeconomic policy front, recent announcements from the U.S. on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures. Geopolitical uncertainties are also pronounced.
• The Board’s assessment is that monetary policy remains restrictive and the continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the Board is cautious about the outlook.
• The Board will rely upon the data and the evolving assessment of risks to guide its decisions and is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome.
• The next meeting is on 20 May 2025.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

RBNZ Gov Hawkesby’s Speech (1:00 am GMT)

What can we expect from NZD today?

Newly appointed Reserve Bank of New Zealand (RBNZ) Governor Christian Hawkesby will be holding a press conference on the Financial Stability Report in Wellington where his remarks are likely to drive the direction for the Kiwi during the Asian session.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 25 basis points bringing it down to 3.50% on 9 April, marking the fifth consecutive rate cut.
• The Committee assessed that annual consumer price inflation remains near the midpoint of the MPC’s 1 to 3% target band while firms’ inflation expectations and core inflation are consistent with inflation remaining at target over the medium term.
• Economic activity has evolved largely as expected since the February Monetary Policy Statement; higher-than-expected export prices and a lower exchange rate have supported primary sector incomes and overall economic growth.
• Although monetary restraint had been removed at pace, household spending and residential investment have remained weak.
• The recently announced increases in global trade barriers weaken the outlook for global economic activity. On balance, these developments create downside risks to the outlook for economic activity and inflation.
• The Committee noted that the increase in tariffs will take time to work through the global economy, but the direct price increases for economies imposing tariffs and the dampening impact of increased economic uncertainty on global demand will occur relatively quickly.
• With CPI inflation close to the mid-point of the target range, significant spare capacity in the economy, and a weaker activity outlook stemming from global trade policy, the Committee agreed that a further reduction in the OCR was appropriate.
• Meanwhile, future policy decisions will be determined by the outlook for inflationary pressure over the medium term.
• The next meeting is on 28 May 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?

With demand for safe-haven assets such as the yen fading, USD/JPY steadied around 142.30 in early trading on Wednesday before rising above 143 at the beginning of the Asia session. This currency pair could remain lifted today, especially if the Federal Reserve projects a hawkish stance during the FOMC meeting.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 1 May, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
• Japan’s economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors, although factors such as accommodative financial conditions are expected to provide support. Thereafter, Japan’s economic growth rate is likely to rise, with overseas economies returning to a moderate growth path.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be in the range of 2.0-2.5% for fiscal 2025, in the range of 1.5-2.0% for fiscal 2026, and at around 2% for fiscal 2027. The effects of the past rise in import prices and of the recent rise in food prices such as rice prices – these factors have pushed up the inflation rate so far – are expected to wane.
• Meanwhile, underlying CPI inflation is likely to be sluggish, mainly due to the deceleration in the economy. Thereafter, however, underlying CPI inflation is expected to increase gradually.
• Regarding the employment and income situation, despite the deceleration in the economy, labour market conditions are likely to remain tight, as it will become more difficult for labour supply of women and seniors to increase.
• Comparing the projections through fiscal 2026 with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rate for fiscal 2024 is somewhat higher, but the projected growth rates for fiscal 2025 and 2026 are lower due to the effects of trade and other policies in each jurisdiction.
• There are various risks to the outlook. In particular, it is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them. It is therefore necessary to pay due attention to the impact of these developments on financial and foreign exchange markets and on Japan’s economic activity and prices.
• With regard to the risk balance, risks to economic activity are skewed to the downside for fiscal 2025 and 2026. Risks to prices are also skewed to the downside for fiscal 2025 and 2026.
• The next meeting is scheduled for 17 June 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

Germany Factory Orders (6:00 am GMT)

What can we expect from EUR today?

After declining sharply in January and stagnating in February, factory orders in Germany are now expected to rise 1.4% MoM. This data will set the early tone for the Euro, but the FOMC meeting and press conference will be the main driver for this currency pair.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17 April to mark the sixth successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.40%, 2.65% and 2.25% respectively.
• The disinflation process is well on track with both headline and core inflation declining in March while services inflation has also eased markedly over recent months. Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Wage growth is moderating, and profits are partially buffering the impact of still elevated wage growth on inflation. The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions.
• Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area.
• The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.
• In particular, the Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.
• The next meeting is on 5 June 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

During his speech at “The Central Banking Dialogue” in Zurich on Tuesday, Swiss National Bank (SNB) Governing Board Chairman Martin Schlegel stated that the central bank is ready to intervene in the foreign currency markets and cut interest rates even below zero to prevent inflation falling below its price stability target. Swiss inflation fell to 0% in April, its lowest level in four years, data showed on Monday.  This latest result comes in at the bottom end of the SNB’s 0 to 2% target range, fuelling expectations that the SNB will cut rates from the current 0.25% at its next policy meeting on June 19, while markets expect rates could go below zero later in the year. The Swiss franc could weaken in the coming weeks, especially if the Federal Reserve projects a hawkish stance during Wednesday’s FOMC meeting.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
• Underlying inflationary pressure has decreased further this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
• In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
• GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
• The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

S&P Global Construction PMI (8:30 am GMT)

What can we expect from GBP today?

Construction activity in the U.K. has contracted over the past three months as civil engineering was the weakest-performing sector, plunging to 38.8 – its steepest decline since October 2020, while residential construction continued to shrink as well. This sector looks set to notch a fourth successive month of weaker output, a result that could weigh on the pound during the European trading session.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain the Bank Rate at 4.50% on 19 March 2025, while one member preferred to reduce it by 25 basis points (bps).
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation increased to 3.0% in January from 2.5% in December, slightly higher than expected in the February Report; domestic price and wage pressures are moderating, but remain somewhat elevated.
• Although global energy prices have fallen back recently, they remain higher than last year and CPI inflation is still projected to rise to around 3.75% in 2025 Q3. While CPI inflation is expected to fall back thereafter, the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.
• While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.
• The labour market had continued to ease, although it was still judged to be broadly in balance – some indicators of employment intentions had deteriorated markedly, to levels consistent with shrinking employment while other indicators, such as the number of vacancies, had not weakened to the same extent.
• Domestic price and wage pressures were moderating, but remained somewhat elevated. A range of indicators suggested that underlying pay growth had eased further in recent months, although annual growth in private sector regular average weekly earnings had picked up to 6.1% in the three months to January.
• Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 8 May 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

With no major data due for release today, the Loonie will take its cue from U.S. oil inventory data  but the main driver would be the FOMC meeting and press conference by Federal Reserve Chairman Jerome Powell that will take place later today.

Central Bank Notes:

• The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% – marking the first pause after seven consecutive meetings where rates were reduced.
• The major shift in direction of U.S. trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations.
• Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally – the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy.
• In the first scenario, uncertainty is high but tariffs are limited in scope – Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year.
• Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the U.S., the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the Euro Area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.
• In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.
• The Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs while proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
• Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war and the Governing Council will focus on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval by supporting economic growth while ensuring that inflation remains well-controlled.
• The next meeting is on 4 June 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

Crude oil prices rebounded strongly on Tuesday on signs of weakening production in the U.S. and higher demand in Europe and China. WTI oil jumped 3.4% on Tuesday, hitting an overnight high of $59.84. In addition, the API stockpiles declined more than originally anticipated, as 4.5M barrels of crude were removed from storage, easily exceeding the forecast of 2.5M draw. Should the EIA inventories point result in a high drawdown, this commodity could experience robust tailwinds later today.

Next 24 Hours Bias

Medium Bullish

The post IC Markets Asia Fundamental Forecast | 7 May 2025 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 7/5/2025 first appeared on IC Markets | Official Blog.

Traders are preparing for some big moves in foreign exchange later today, with the Federal Reserve Bank due to update the market on its latest rate call. The FOMC is fully expected to keep rates on hold, and any move today would result in huge moves in the dollar. However, the more likely scenario is that we see some strong moves on the back of the forward guidance that we get from the statement or from Jerome Powell in his press conference later in the day, with any more dovish indications likely to see further pressure on the dollar and any relatively hawkish (or really less dovish) calls likely to see the dollar rally back into recent ranges.

Cable traders will be watching the event even more closely than some, with the pair sitting near a key technical level that could see bigger moves if we see breaks. Cable topped out a few times just under 1.3450 at the end of April, and even though it is trading nearly a big figure below that level now, a dovish Fed—or certainly a surprise cut—could see that level challenged swiftly, with a break likely to bring the key 1.4000 psychological level into focus. A less dovish FOMC would see the dollar push higher and Cable drop back into recent ranges, with initial support likely around 1.3230, where it has based in the last couple of weeks.

Resistance 2: 1.4000 – Psychological Level
Resistance 1: 1.3444 – Trendline Resistance and 2025 High

Support 1: 1.3230 – 23 April Low
Support 2: 1.2851 – 200-Day Moving Average

The post Trade Cable on the FOMC Interest Rate Decision first appeared on IC Markets | Official Blog.

US Markets Dip Ahead of Fed – Dow Down 1%

US stock markets dropped in trading yesterday ahead of the key Fed rate decision as investors digested more comments from President Trump on tariffs. The President advised that the US would be putting fair numbers down on tariffs, raising concerns that there would be less discussion with trade partners. All three of the major indices fell: the Dow dropped 0.95%, the S&P lost 0.77%, and the Nasdaq closed 0.87% down. Treasury yields dipped, the 2-year down 5 basis points to 3.783%, and the 10-year dropped 4.9 basis points to 4.294%. The dollar also lost ground against most of the majors, the DXY down 0.15% to 99.24. Oil prices jumped off multi-year lows on news of greater demand from Europe and China, Brent up 2.94% to $62.00, and WTI rose 3.43% to $59.09 a barrel. Gold drove higher again to threaten all-time highs ahead of the Fed, rising 2.34% to $3,430.02 an ounce.

Fed in Focus Today

The Federal Reserve Bank will make its latest interest rate decision today, with the market fully expecting them to keep rates on hold despite demands from the Oval Office to cut them. The market is currently pricing in a 98% chance of rates remaining on hold, but we are likely to see volatility around the accompanying statement and the later press conference on when the next cut will come. It is likely that the next meeting in June will be ‘live,’ with a chance of a cut coming then, currently pricing in around a 30% chance, with odds increasing to 60% for a July move. The message that we receive from Jerome Powell will be key later today, with any more dovish indications likely to see further pressure on the dollar, which is still sitting close to sensitive technical levels on most of the majors. If he remains relatively hawkish and stays with a ‘wait and see,’ data-watching approach, then we could see the dollar rally back into recent ranges.

Busy Day Ahead for Traders

Financial markets traders are preparing for another busy day ahead, with geopolitical updates still a major influence on markets ahead of the biggest fundamental update of them all – the Federal Reserve rate call. We have already seen key data in New Zealand early in the Asian session, with the unemployment rate dropping from 5.3% to 5.1%, helping to push the Kiwi back towards annual highs. There will be a focus on UK markets early in the European session with Construction PMI data (exp. 46.0) due out, but really the big market moves should come in the US session. The Federal Reserve Bank is due to make its latest rate call later in the day, along with its statement and the usual later press conference. However, some traders feel that comments from the Oval Office, both with regard to the Fed and/or other trade comments, could have a bigger impact on the market.

The post General Market Analysis – 07/05/25 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei up 1.04%, Shanghai Composite up 0.9%, Hang Seng up 0.52% ASX down 0.1%
• Commodities : Gold at $3365.35 (1.39%), Silver at $33.58 (2.49%), Brent Oil at $61.38 (1.5%), WTI Oil at $57.9 (1.49%)
• Rates : US 10-year yield at 4.370, UK 10-year yield at 4.5460, Germany 10-year yield at 2.5165

News & Data:

• (USD) ISM Services PMI  51.6  to 50.2  expected

Markets Update:

Asia-Pacific markets mostly rose on Tuesday as investors evaluated trade developments between the U.S. and regional economies. Asian currencies gained strength as the U.S. dollar weakened. India proposed zero tariffs on steel, auto parts, and pharmaceuticals on a reciprocal basis within a set limit, while Malaysia noted the U.S. agreed to further talks that might include tariff cuts.

U.S. Treasury Secretary Scott Bessent said deals were “very close,” echoing President Trump’s earlier comments suggesting possible agreements this week. Chinese stocks resumed trading post-Labor Day amid signs of easing tensions between Washington and Beijing. The CSI 300 gained 0.95%, and Hong Kong’s Hang Seng rose 0.67%.

However, China’s Caixin services PMI slipped to a seven-month low of 50.7 in April, down from 51.9. In India, the Nifty 50 dipped 0.15%, while the BSE Sensex edged up 0.14%. Australia’s S&P/ASX 200 remained flat. Markets in Japan and South Korea were closed for holidays.

Meanwhile, U.S. stock futures stayed flat ahead of the Federal Reserve’s policy meeting, the first since President Trump’s announcement of “reciprocal” tariffs. A rate decision is expected Wednesday, with futures suggesting only a 2.7% chance of a rate cut. Erik Weisman of MFS Investment Management anticipates Fed Chair Jerome Powell will maintain a cautious stance.

On Monday, U.S. stocks ended lower, breaking the S&P 500’s nine-day winning streak. The S&P 500 fell 0.64% to 5,650.38, the Nasdaq dropped 0.74%, and the Dow declined 0.24%, reflecting ongoing investor concerns over global trade.

Upcoming Events: 

• 02:00 PM GMT – CAD Ivey PMI
• 12:30 PM GMT – CAD Trade Balance
• 12:30 PM GMT – USD Trade Balance

The post Tuesday 6th May 2025: Asia-Pacific Markets Rise Amid Trade Hopes and Fed Caution first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 6 May 2025

What happened in the Asia session?

The Caixin China General Services PMI declined to 50.7 in April, down from March’s three-month high of 51.9. Not only did the latest report fall short of market forecasts of 51.7, but it also marked the softest expansion since last September. New orders grew at the slowest pace in 28 months, impacted by disruptions in goods trade amidst U.S. tariffs, while new export business rose only fractionally, with some firms noting improved demand due to rising tourism activity. However, employment declined for the second consecutive month amid concerns over rising costs.

What does it mean for the Europe & US sessions?

The Swiss franc remains supported by safe-haven flows but Monday’s ‘soft’ inflation data increases the likelihood of another rate cut by the Swiss National Bank (SNB), providing support for USD/CHF on Monday. Meanwhile, SNB Governing Board Chairman Martin Schlegel will be participating in a fireside chat titled “The Central Banking Dialogue” at the Point Zero Forum in Zurich – watch for any policy hints from Schlegel during this event.

Services activity in the Euro Area is expected to fall into contraction following five months of steady expansion. Business activity decreased marginally while both new orders and export orders contracted, according to flash estimates. The Euro will likely see modest headwinds on Tuesday.

Following 17 months of expansion, services activity in the U.K. is all but certain to register a contraction in April. New orders and employment both declined, according to flash estimates, amidst rising global economic uncertainty and subdued domestic demand conditions, influenced by the negative impact of U.S. tariffs. Cable will likely face modest overhead pressures as European markets come online.

Canada’s trade deficit is expected to widen further in March, increasing from CAD$1.5B in the previous month to CAD$1.7B, while the Ivey PMI could show further signs of moderation. The Loonie remains sensitive to overall risk sentiment and fluctuations in oil prices – USD/CAD edged higher toward 1.38.50 at the beginning of Tuesday’s Asia session.

The Dollar Index (DXY)

Key news events today

Trade Balance (12:30 pm GMT)

What can we expect from DXY today?

Pressured by a wider-than-expected trade deficit, demand for the dollar remains somewhat weak. Although economic optimism has improved, the situation remains fragile. The U.S. trade deficit is expected to widen from $123B in the previous month to $137B in March, which could add modest pressure to the dollar and drive the DXY lower later today. Traders are also positioned cautiously ahead of tomorrow’s FOMC decision.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 19 March 2025
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run but uncertainty around the economic outlook has increased; the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
• Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
• The next meeting is scheduled for 6 to 7 May 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

Trade Balance (12:30 pm GMT)

What can we expect from Gold today?

Gold rose over 3% on Monday as spot prices climbed above $3,300/oz. Demand for this precious metal has picked up once more and we could see further tailwinds, especially if Tuesday’s U.S. trade data disappoints.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

Caixin Services PMI (1:45 am GMT)

What can we expect from AUD today?

The Caixin China General Services PMI declined to 50.7 in April, down from March’s three-month high of 51.9. Not only did the latest report fall short of market forecasts of 51.7, but it also marked the softest expansion since last September. New orders grew at the slowest pace in 28 months, impacted by disruptions in goods trade amidst U.S. tariffs, while new export business rose only fractionally, with some firms noting improved demand due to rising tourism activity. However, employment declined for the second consecutive month amid concerns over rising costs. The Aussie remained lifted as it rose above 0.6450 by midday in Asia.

Central Bank Notes:

• The RBA maintained the cash rate at 4.10% on 1 April, following a 25-basis point reduction on 18 February.
• Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance.
• Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February Statement on Monetary Policy.
• Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress. However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.
• At the same time, a range of indicators suggest that labour market conditions remain tight. Despite a decline in employment in February, measures of labour underutilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers. Wage pressures have eased a little more than expected but productivity growth has not picked up and growth in unit labour costs remains high.
• There are notable uncertainties about the outlook for domestic economic activity and inflation. The central projection is for growth in household consumption to continue to increase as income growth rises. But there is a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market than currently expected.
• Uncertainty about the outlook abroad also remains significant. On the macroeconomic policy front, recent announcements from the U.S. on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures. Geopolitical uncertainties are also pronounced.
• The Board’s assessment is that monetary policy remains restrictive and the continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the Board is cautious about the outlook.
• The Board will rely upon the data and the evolving assessment of risks to guide its decisions and is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome.
• The next meeting is on 20 May 2025.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Despite softer commodity prices and a higher-than-expected unemployment rate, demand for the Kiwi was robust as it made an overnight high of 0.5995. This currency pair pulled back slightly at the beginning of Tuesday’s session but it should remain elevated as the day progresses.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 25 basis points bringing it down to 3.50% on 9 April, marking the fifth consecutive rate cut.
• The Committee assessed that annual consumer price inflation remains near the midpoint of the MPC’s 1 to 3% target band while firms’ inflation expectations and core inflation are consistent with inflation remaining at target over the medium term.
• Economic activity has evolved largely as expected since the February Monetary Policy Statement; higher-than-expected export prices and a lower exchange rate have supported primary sector incomes and overall economic growth.
• Although monetary restraint had been removed at pace, household spending and residential investment have remained weak.
• The recently announced increases in global trade barriers weaken the outlook for global economic activity. On balance, these developments create downside risks to the outlook for economic activity and inflation.
• The Committee noted that the increase in tariffs will take time to work through the global economy, but the direct price increases for economies imposing tariffs and the dampening impact of increased economic uncertainty on global demand will occur relatively quickly.
• With CPI inflation close to the mid-point of the target range, significant spare capacity in the economy, and a weaker activity outlook stemming from global trade policy, the Committee agreed that a further reduction in the OCR was appropriate.
• Meanwhile, future policy decisions will be determined by the outlook for inflationary pressure over the medium term.
• The next meeting is on 28 May 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?

With demand for safe-haven assets such as the yen fading, USD/JPY has climbed steadily since its lows of 140 in the third week of April. This currency pair rose strongly toward 146 last week before running out of steam but it remained supported as Asian markets came online on Tuesday. 

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 1 May, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
• Japan’s economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors, although factors such as accommodative financial conditions are expected to provide support. Thereafter, Japan’s economic growth rate is likely to rise, with overseas economies returning to a moderate growth path.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be in the range of 2.0-2.5% for fiscal 2025, in the range of 1.5-2.0% for fiscal 2026, and at around 2% for fiscal 2027. The effects of the past rise in import prices and of the recent rise in food prices such as rice prices – these factors have pushed up the inflation rate so far – are expected to wane.
• Meanwhile, underlying CPI inflation is likely to be sluggish, mainly due to the deceleration in the economy. Thereafter, however, underlying CPI inflation is expected to increase gradually.
• Regarding the employment and income situation, despite the deceleration in the economy, labour market conditions are likely to remain tight, as it will become more difficult for labour supply of women and seniors to increase.
• Comparing the projections through fiscal 2026 with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rate for fiscal 2024 is somewhat higher, but the projected growth rates for fiscal 2025 and 2026 are lower due to the effects of trade and other policies in each jurisdiction.
• There are various risks to the outlook. In particular, it is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them. It is therefore necessary to pay due attention to the impact of these developments on financial and foreign exchange markets and on Japan’s economic activity and prices.
• With regard to the risk balance, risks to economic activity are skewed to the downside for fiscal 2025 and 2026. Risks to prices are also skewed to the downside for fiscal 2025 and 2026.
• The next meeting is scheduled for 17 June 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

S&P Global Composite PMI (8:00 am GMT)

What can we expect from EUR today?

Services activity in the Euro Area is expected to fall into contraction following five months of steady expansion. Business activity decreased marginally while both new orders and export orders contracted, according to flash estimates. The Euro will likely see modest headwinds on Tuesday.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17 April to mark the sixth successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.40%, 2.65% and 2.25% respectively.
• The disinflation process is well on track with both headline and core inflation declining in March while services inflation has also eased markedly over recent months. Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Wage growth is moderating, and profits are partially buffering the impact of still elevated wage growth on inflation. The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions.
• Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area.
• The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.
• In particular, the Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.
• The next meeting is on 5 June 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

SNB Chairman Schlegel’s Speech (7:35 am GMT)

What can we expect from CHF today?

The Swiss franc remains supported by safe-haven flows but Monday’s ‘soft’ inflation data increases the likelihood of another rate cut by the Swiss National Bank (SNB), providing support for USD/CHF on Monday. Meanwhile, SNB Governing Board Chairman Martin Schlegel will be participating in a fireside chat titled “The Central Banking Dialogue” at the Point Zero Forum in Zurich – watch for any policy hints from Schlegel during this event.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
• Underlying inflationary pressure has decreased further this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
• In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
• GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
• The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

S&P Global Composite PMI (8:30 am GMT)

What can we expect from GBP today?

Following 17 months of expansion, services activity in the U.K. is all but certain to register a contraction in April. New orders and employment both declined, according to flash estimates, amidst rising global economic uncertainty and subdued domestic demand conditions, influenced by the negative impact of U.S. tariffs. Cable will likely face modest overhead pressures as European markets come online.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain the Bank Rate at 4.50% on 19 March 2025, while one member preferred to reduce it by 25 basis points (bps).
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation increased to 3.0% in January from 2.5% in December, slightly higher than expected in the February Report; domestic price and wage pressures are moderating, but remain somewhat elevated.
• Although global energy prices have fallen back recently, they remain higher than last year and CPI inflation is still projected to rise to around 3.75% in 2025 Q3. While CPI inflation is expected to fall back thereafter, the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.
• While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.
• The labour market had continued to ease, although it was still judged to be broadly in balance – some indicators of employment intentions had deteriorated markedly, to levels consistent with shrinking employment while other indicators, such as the number of vacancies, had not weakened to the same extent.
• Domestic price and wage pressures were moderating, but remained somewhat elevated. A range of indicators suggested that underlying pay growth had eased further in recent months, although annual growth in private sector regular average weekly earnings had picked up to 6.1% in the three months to January.
• Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 8 May 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

Trade Balance (12:30 pm GMT)

Ivey PMI (2:00 pm GMT)

What can we expect from CAD today?

Canada’s trade deficit is expected to widen further in March, increasing from CAD$1.5B in the previous month to CAD$1.7B, while the Ivey PMI could show further signs of moderation. The Loonie remains sensitive to overall risk sentiment and fluctuations in oil prices – USD/CAD edged higher toward 1.38.50 at the beginning of Tuesday’s Asia session.

Central Bank Notes:

• The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% – marking the first pause after seven consecutive meetings where rates were reduced.
• The major shift in direction of U.S. trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations.
• Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally – the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy.
• In the first scenario, uncertainty is high but tariffs are limited in scope – Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year.
• Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the U.S., the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the Euro Area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.
• In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.
• The Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs while proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
• Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war and the Governing Council will focus on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval by supporting economic growth while ensuring that inflation remains well-controlled.
• The next meeting is on 4 June 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Fears about rising global supply due to a decision by OPEC+ to expedite its output hike caused oil prices to dive over 5% on Monday – WTI oil tumbled sharply toward the $55 mark before stabilising around $57.10 per barrel. On Saturday, OPEC+ agreed to further speed up oil production hikes for a second consecutive month, functioning as a catalyst for Monday’s sell-off. Moving over to U.S. inventories, the API stockpiles have been increasing since February, a sign of weaker demand for crude oil. With demand concerns persisting, another week of higher builds would weigh on prices once more.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 6 May 2025 first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bullish

Overall momentum of the chart: Bearish

Price could potentially make a bullish continuation toward the 1st resistance. Additionally, the price is above the Ichimoku Cloud, which adds further significance to the strength of the bullish momentum.

Pivot: 99.37

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 97.98

Supporting reasons: Identified as a swing low support, indicating a potential area where the price could stabilize once again.

1st resistance: 101.34
Supporting reasons: Identified as a pullback resistance that aligns with the 61.8% Fibonacci retracement, indicating a potential level that could cap further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation toward the 1st support.

Pivot: 1.1384

Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify. Additionally, the price is below the Ichimoku Cloud, which adds further significance to the strength of the bearish momentum.

 1st support: 1.1145
Supporting reasons: Identified as a pullback support that aligns close to the 61.8% Fibonacci retracement, indicating a potential area where the price could stabilize once more.

1st resistance: 1.1567

Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation toward the 1st support

Pivot: 164.55

Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area where selling pressures could intensify.

1st support: 160.49
Supporting reasons: Identified as a pullback support that aligns with the 61.8% Fibonacci retracement, indicating a potential area where the price could stabilize once again.

1st resistance: 166.59
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish bounce off this level to rise toward the 1st resistance. 

Pivot: 0.8461

Supporting reasons: Identified as a pullback support that aligns close to the 61.8% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 0.8374
Supporting reasons: Identified as a pullback support, indicating a potential area where the price could stabilize once more.

1st resistance: 0.8556
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

GBP/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation toward the 1st support.

Pivot: 11.3338

Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify. Additionally, the price is below the Ichimoku Cloud, which adds further significance to the strength of the bearish momentum.

1st support: 1.3207
Supporting reasons: Identified as an overlap support, acting as a potential level where the price could stabilize once again.

1st resistance: 1.3443
Supporting reasons: Identified as a swing high resistance, indicating a potential level that could cap further upward movement.

GBP/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance. Additionally, the price is above the Ichimoku Cloud, which adds further significance to the strength of the bullish momentum.

Pivot: 190.09

Supporting reasons: Identified as an overlap support that aligns close to the 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 1867.68

Supporting reasons: Identified as a multi-swing low support that aligns close to the 51.8% Fibonacci retracement, indicating a potential level where the price could stabilize once more.

1st resistance: 193.70
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could potentially make a bullish continuation toward the 1st resistance. Additionally, the price is above the Ichimoku Cloud, which adds further significance to the strength of the bullish momentum.

Pivot: 0.8218

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 0.8120
Supporting reasons: Identified as a pullback support, indicating a potential level where the price could stabilize once again.

1st resistance: 0.8373
Supporting reasons: Identified as a pullback resistance, indicating a potential level that could cap further upward movement.

USD/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

Price could potentially make a bullish continuation toward the 1st resistance. Additionally, the price is above the Ichimoku Cloud, which adds further significance to the strength of the bullish momentum.

Pivot: 143.80

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 141.64
Supporting reasons: Identified as a pullback support, suggesting a potential area where the price could stabilize once more.

1st resistance: 146.59
Supporting reasons: Identified as a pullback resistance, indicating a potential level that could cap further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Neutral

Price could rise toward the pivot and potentially make a bearish reversal off this level to fall toward the 1st support.

Pivot: 1.3896

Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area where selling pressures could intensify. The presence of the red Ichimoku Cloud adds further significance to the strength of the bearish momentum.

1st support: 1.3781
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where the price could stabilize once more.

1st resistance: 1.3972
Supporting reasons: Identified as a swing-high resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 0.6430
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 0.6340

Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, suggesting a potential area where the price could stabilize once again.

1st resistance: 0.6545
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could rise toward the pivot and potentially make a bearish reversal off this level to pull back toward the 1st support.

Pivot: 0.6024
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area where selling pressures could intensify.

1st support: 0.5887

Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, suggesting a potential area where the price could stabilize once more.

1st resistance: 0.6112

Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 40,673.70

Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 39,200.50

Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 42,165.30

Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

DE40 (DAX):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 22,723.90
Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 22,083.20

Supporting reasons: Identified as an overlap support, indicating a key level where the price could stabilize once more.

1st resistance: 23,438.30
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 5,434.40

Supporting reasons: Identified as a swing-low support, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 5,322.55

Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 5,780.15

Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 92,463.38
Supporting reasons: Identified as an overlap support that aligns with a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 88,428.80
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where the price could stabilize once more.

1st resistance: 97,500.18
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 1,740.75
Supporting reasons: Identified as a multi-swing-low support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 1,669.20
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 1,913.71
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could rise toward the pivot and potentially make a bearish reversal off this level to fall toward the 1st support.

Pivot: 59.40

Supporting reasons: Identified as a swing-high resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify. The presence of the red Ichimoku Cloud adds further significance to the strength of the bearish momentum.

1st support: 55.83
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where the price could stabilize once more.

1st resistance: 61.86
Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish continuation toward the 1st resistance.

Pivot: 3348.29

Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 3260.33
Supporting reasons: Identified as a pullback support, acting as a potential level where price could stabilize once again.

1st resistance: 3489.69
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

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The post Tuesday 6th May 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 6 May 2025

What happened in the U.S. session?

Following a nine-month low of 50.8 in the previous month, the ISM Services PMI unexpectedly jumped to 51.6 in April, well above forecasts of 50.6. New orders and inventories grew at a faster rate while business activity remained in expansion territory. However, employment continued to contract, although at a slower pace. “Regarding tariffs, respondents cited actual pricing impacts as concerns, more so than uncertainty and future pressures. Respondents continue to mention federal agency budget cuts as a drag on business, but overall, results are improving”, according to Steve Miller, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee. Demand for the greenback saw a marginal uptick with the dollar index (DXY) floating above 99.50 overnight.

What does it mean for the Asia Session?

China will drop its Caixin Services PMI report on Tuesday, where we could see this sector take a hit following U.S. President Donald Trump’s tariff announcements on Liberation Day on the 2nd of April. Services activity had accelerated to a 3-month high in March, with both business activity and new orders increasing at faster rates, while firms were also optimistic regarding future output. However, it should come as no surprise if we see PMI activity for this sector fall into contraction.

The Dollar Index (DXY)

Key news events today

Trade Balance (12:30 pm GMT)

What can we expect from DXY today?

Pressured by a wider-than-expected trade deficit, demand for the dollar remains somewhat weak. Although economic optimism has improved, the situation remains fragile. The U.S. trade deficit is expected to widen from $123B in the previous month to $137B in March, which could add modest pressure to the dollar and drive the DXY lower later today. Traders are also positioned cautiously ahead of tomorrow’s FOMC decision.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 19 March 2025
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run but uncertainty around the economic outlook has increased; the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
• Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
• The next meeting is scheduled for 6 to 7 May 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

Trade Balance (12:30 pm GMT)

What can we expect from Gold today?

Gold rose over 3% on Monday as spot prices climbed above $3,300/oz. Demand for this precious metal has picked up once more and we could see further tailwinds, especially if Tuesday’s U.S. trade data disappoints.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

Caixin Services PMI (1:45 am GMT)

What can we expect from AUD today?

China will drop its Caixin Services PMI report on Tuesday, where we could see this sector take a hit following U.S. President Donald Trump’s tariff announcements on Liberation Day on the 2nd of April. Services activity had accelerated to a 3-month high in March, with both business activity and new orders increasing at faster rates, while firms were also optimistic regarding future output. However, it should come as no surprise if we see PMI activity for this sector fall into contraction, putting downward pressure on the Aussie.

Central Bank Notes:

• The RBA maintained the cash rate at 4.10% on 1 April, following a 25-basis point reduction on 18 February.
• Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance.
• Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February Statement on Monetary Policy.
• Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress. However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.
• At the same time, a range of indicators suggest that labour market conditions remain tight. Despite a decline in employment in February, measures of labour underutilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers. Wage pressures have eased a little more than expected but productivity growth has not picked up and growth in unit labour costs remains high.
• There are notable uncertainties about the outlook for domestic economic activity and inflation. The central projection is for growth in household consumption to continue to increase as income growth rises. But there is a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market than currently expected.
• Uncertainty about the outlook abroad also remains significant. On the macroeconomic policy front, recent announcements from the U.S. on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures. Geopolitical uncertainties are also pronounced.
• The Board’s assessment is that monetary policy remains restrictive and the continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the Board is cautious about the outlook.
• The Board will rely upon the data and the evolving assessment of risks to guide its decisions and is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome.
• The next meeting is on 20 May 2025.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Despite softer commodity prices and a higher-than-expected unemployment rate, demand for the Kiwi was robust as it made an overnight high of 0.5995. This currency pair pulled back slightly at the beginning of Tuesday’s session but it should remain elevated as the day progresses.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 25 basis points bringing it down to 3.50% on 9 April, marking the fifth consecutive rate cut.
• The Committee assessed that annual consumer price inflation remains near the midpoint of the MPC’s 1 to 3% target band while firms’ inflation expectations and core inflation are consistent with inflation remaining at target over the medium term.
• Economic activity has evolved largely as expected since the February Monetary Policy Statement; higher-than-expected export prices and a lower exchange rate have supported primary sector incomes and overall economic growth.
• Although monetary restraint had been removed at pace, household spending and residential investment have remained weak.
• The recently announced increases in global trade barriers weaken the outlook for global economic activity. On balance, these developments create downside risks to the outlook for economic activity and inflation.
• The Committee noted that the increase in tariffs will take time to work through the global economy, but the direct price increases for economies imposing tariffs and the dampening impact of increased economic uncertainty on global demand will occur relatively quickly.
• With CPI inflation close to the mid-point of the target range, significant spare capacity in the economy, and a weaker activity outlook stemming from global trade policy, the Committee agreed that a further reduction in the OCR was appropriate.
• Meanwhile, future policy decisions will be determined by the outlook for inflationary pressure over the medium term.
• The next meeting is on 28 May 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?

With demand for safe-haven assets such as the yen fading, USD/JPY has climbed steadily since its lows of 140 in the third week of April. This currency pair rose strongly toward 146 last week before running out of steam but it remained supported as Asian markets came online on Tuesday. 

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 1 May, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
• Japan’s economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors, although factors such as accommodative financial conditions are expected to provide support. Thereafter, Japan’s economic growth rate is likely to rise, with overseas economies returning to a moderate growth path.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be in the range of 2.0-2.5% for fiscal 2025, in the range of 1.5-2.0% for fiscal 2026, and at around 2% for fiscal 2027. The effects of the past rise in import prices and of the recent rise in food prices such as rice prices – these factors have pushed up the inflation rate so far – are expected to wane.
• Meanwhile, underlying CPI inflation is likely to be sluggish, mainly due to the deceleration in the economy. Thereafter, however, underlying CPI inflation is expected to increase gradually.
• Regarding the employment and income situation, despite the deceleration in the economy, labour market conditions are likely to remain tight, as it will become more difficult for labour supply of women and seniors to increase.
• Comparing the projections through fiscal 2026 with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rate for fiscal 2024 is somewhat higher, but the projected growth rates for fiscal 2025 and 2026 are lower due to the effects of trade and other policies in each jurisdiction.
• There are various risks to the outlook. In particular, it is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them. It is therefore necessary to pay due attention to the impact of these developments on financial and foreign exchange markets and on Japan’s economic activity and prices.
• With regard to the risk balance, risks to economic activity are skewed to the downside for fiscal 2025 and 2026. Risks to prices are also skewed to the downside for fiscal 2025 and 2026.
• The next meeting is scheduled for 17 June 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

S&P Global Composite PMI (8:00 am GMT)

What can we expect from EUR today?

Services activity in the Euro Area is expected to fall into contraction following five months of steady expansion. Business activity decreased marginally while both new orders and export orders contracted, according to flash estimates. The Euro will likely see modest headwinds on Tuesday.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17 April to mark the sixth successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.40%, 2.65% and 2.25% respectively.
• The disinflation process is well on track with both headline and core inflation declining in March while services inflation has also eased markedly over recent months. Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Wage growth is moderating, and profits are partially buffering the impact of still elevated wage growth on inflation. The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions.
• Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area.
• The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.
• In particular, the Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.
• The next meeting is on 5 June 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

SNB Chairman Schlegel’s Speech (7:35 am GMT)

What can we expect from CHF today?

The Swiss franc remains supported by safe-haven flows but Monday’s ‘soft’ inflation data increases the likelihood of another rate cut by the Swiss National Bank (SNB), providing support for USD/CHF on Monday. Meanwhile, SNB Governing Board Chairman Martin Schlegel will be participating in a fireside chat titled “The Central Banking Dialogue” at the Point Zero Forum in Zurich – watch for any policy hints from Schlegel during this event.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
• Underlying inflationary pressure has decreased further this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
• In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
• GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
• The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

S&P Global Composite PMI (8:30 am GMT)

What can we expect from GBP today?

Following 17 months of expansion, services activity in the U.K. is all but certain to register a contraction in April. New orders and employment both declined, according to flash estimates, amidst rising global economic uncertainty and subdued domestic demand conditions, influenced by the negative impact of U.S. tariffs. Cable will likely face modest overhead pressures as European markets come online.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain the Bank Rate at 4.50% on 19 March 2025, while one member preferred to reduce it by 25 basis points (bps).
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation increased to 3.0% in January from 2.5% in December, slightly higher than expected in the February Report; domestic price and wage pressures are moderating, but remain somewhat elevated.
• Although global energy prices have fallen back recently, they remain higher than last year and CPI inflation is still projected to rise to around 3.75% in 2025 Q3. While CPI inflation is expected to fall back thereafter, the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.
• While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.
• The labour market had continued to ease, although it was still judged to be broadly in balance – some indicators of employment intentions had deteriorated markedly, to levels consistent with shrinking employment while other indicators, such as the number of vacancies, had not weakened to the same extent.
• Domestic price and wage pressures were moderating, but remained somewhat elevated. A range of indicators suggested that underlying pay growth had eased further in recent months, although annual growth in private sector regular average weekly earnings had picked up to 6.1% in the three months to January.
• Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 8 May 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

Trade Balance (12:30 pm GMT)

Ivey PMI (2:00 pm GMT)

What can we expect from CAD today?

Canada’s trade deficit is expected to widen further in March, increasing from CAD$1.5B in the previous month to CAD$1.7B, while the Ivey PMI could show further signs of moderation. The Loonie remains sensitive to overall risk sentiment and fluctuations in oil prices – USD/CAD edged higher toward 1.38.50 at the beginning of Tuesday’s Asia session.

Central Bank Notes:

• The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% – marking the first pause after seven consecutive meetings where rates were reduced.
• The major shift in direction of U.S. trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations.
• Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally – the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy.
• In the first scenario, uncertainty is high but tariffs are limited in scope – Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year.
• Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the U.S., the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the Euro Area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.
• In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.
• The Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs while proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
• Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war and the Governing Council will focus on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval by supporting economic growth while ensuring that inflation remains well-controlled.
• The next meeting is on 4 June 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Fears about rising global supply due to a decision by OPEC+ to expedite its output hike caused oil prices to dive over 5% on Monday – WTI oil tumbled sharply toward the $55 mark before stabilising around $57.10 per barrel. On Saturday, OPEC+ agreed to further speed up oil production hikes for a second consecutive month, functioning as a catalyst for Monday’s sell-off. Moving over to U.S. inventories, the API stockpiles have been increasing since February, a sign of weaker demand for crude oil. With demand concerns persisting, another week of higher builds would weigh on prices once more.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 6 May 2025 first appeared on IC Markets | Official Blog.

Stocks Pull Back as Tariff Concerns Rise Again – Nasdaq Down 0.75%

US stock markets pulled back in trading yesterday after their longest winning streak in two decades, as trade concerns increased after President Trump threatened more tariffs and investors looked ahead to this week’s Fed meeting. The Dow dropped 0.24%, the S&P 0.64%, and the Nasdaq lost 0.74%. Treasury yields edged higher again, the 2-year up 0.8 basis points to 3.832%, and the 10-year gained 3.5 basis points to 4.342%, whilst the dollar fell against the majors, the DXY down 0.21% to 99.79. Oil prices hit multi-year lows as OPEC+ confirmed accelerated output increases, Brent off 1.0% to $60.13, and WTI down 1.90% to $57.18 a barrel. Gold jumped higher on haven flows, gaining 2.93% by the close to finish up at $3,333.26.

Black Gold Still in Trouble

Oil prices dropped to multi-year levels in trading yesterday as OPEC+ delivered on well-telegraphed increased supply promises. Prices have been hit on both the demand and supply sides over the last few weeks and months, as trade tensions between the world’s two biggest economies in particular, and between the US and everyone else in general, threaten global growth and demand, whilst internal issues in the oil-producing world have led to production increases. OPEC+ members are increasing production and the rate of those increases to punish some other members which are already overproducing, and if this pattern continues, we should only see further downside for ‘Black Gold’. WTI found a short-term base just above the April low of $55.12, and if we see a break of that over the next few sessions, expect this move to pick up more momentum.

Markets to Remain Busy on Quiet Calendar Day

The global economic calendar is relatively quiet today; however, traders are expecting to see more volatility across markets from geopolitical updates, especially in the Asian session, which saw big moves in some emerging markets yesterday. The Asian session has little on the calendar to excite traders, but growth concerns may weigh again to increase volatility. It is mainly third-tier data that is due out once Europe opens as well, although Swiss franc traders will be prepared for a scheduled update from Swiss National Bank Chairman Martin Schlegel when he talks in Zurich midway through the morning. The New York session is also relatively quiet today.

The post General Market Analysis – 06/05/25 first appeared on IC Markets | Official Blog.