IC Markets Europe Fundamental Forecast | 23 May 2025

What happened in the Asia session?

Consumer spending in New Zealand had been deteriorating since the beginning of 2022 but retail sales jumped at a quarterly rate of 0.9% in the final quarter of last year. Not only did this increase surpass market forecasts of a 0.6% gain, but it also marked the highest receipts in three years. This upward momentum in consumer spending continued in the first quarter of this year as sales rose 0.8% QoQ and outperformed market expectations of a 0.1% increase. The largest contributors to the rise were motor vehicle and parts retailing, pharmaceutical and other store-based retailing, and clothing, footwear, and personal accessories. Stronger sales should spur further demand for the Kiwi, keeping this currency pair elevated on the final day of trading.

Japan’s National Core CPI has now accelerated for the second successive month, rising from an annual rate of 3.2% in the prior month to 3.5% in April, surpassing the forecast of a 3.4% increase. The rising price pressures are attributed to a culmination of factors such as surging food prices, reduced energy subsidies and higher import costs. Coupled with ongoing demand for safe-haven assets, the yen continued to see strong inflows with USD/JPY hitting an overnight low of 142.80 before settling around 143.80 in early trading on Friday.

What does it mean for the Europe & US sessions?

Consumer spending in the U.K. has slowed for two successive months with sales rising just 0.4% MoM in March – categories such as clothing and garden supplies stores led the gains. This trend is expected to gain further traction as the forecast for April points to another ‘soft’ increase of just 0.3%. Despite a slowdown in retail sales in 2025, Cable remains lifted due to the broad weakness in the greenback.

Germany’s economy expanded by 0.2% in the first quarter of 2025, in line with market forecasts and rebounding from a 0.2% contraction in the previous quarter, according to preliminary data. This recovery was driven by softer inflation and reduced borrowing costs, which supported stronger domestic demand. Both business and consumer confidence improved, buoyed by optimism over the successful completion of coalition negotiations and the establishment of a stable government – factors that helped counterbalance persistent concerns about unpredictable U.S. tariff policies.

After declining in January and February, retail sales in Canada rose by 0.7% MoM in March, according to preliminary estimates. The largest increases were seen in categories such as food and beverage retailers, and miscellaneous store retailers. The final estimate now points to consumer spending growing at a monthly rate of 0.6%, slightly lower than the preliminary estimate. Should sales slow more than originally anticipated, this result could weigh on the Loonie later today.

The Dollar Index (DXY)

Key news events today

New Home Sales (2:00 pm GMT)

What can we expect from DXY today?

Following a drop of 9.2% MoM in January, sales for new homes rebounded in February and March, rising at a monthly rate of 3.1% and 7.4% respectively, with 724,000 units sold in the most recent data point. However, April’s forecast points to a decline in sales with 694,000 homes projected to be snapped up, marking a potential decline of 4.1%. Should new home sales fall more than originally anticipated, the dollar could come under even further overhead pressures.

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 7 May 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 further.
• The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.
• Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilised 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 would be 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 17 to 18 June 2025.

Next 24 Hours Bias

Medium Bearish

Gold (XAU)

Key news events today

New Home Sales (2:00 pm GMT)

What can we expect from Gold today?

Following a drop of 9.2% MoM in January, sales for new homes rebounded in February and March, rising at a monthly rate of 3.1% and 7.4% respectively, with 724,000 units sold in the most recent data point. However, April’s forecast points to a decline in sales with 694,000 homes projected to be snapped up, marking a potential decline of 4.1%. Should new home sales fall more than originally anticipated, the dollar could come under even further overhead pressures. After rallying more than 4% this week, demand for gold dampened slightly on Thursday as spot prices retreated from the overnight high of $3,345/oz. This precious metal was hovering around $3,300/oz at the beginning of Friday’s Asia session but it looks set to close in the green for the second time in three weeks.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Despite a slowdown in Composite PMI activity for the second consecutive month as reported in Thursday’s flash report, the Aussie remained elevated as it hovered above 0.6400, primarily due to a significant weakness in the greenback. After declining over the last couple of weeks, this currency pair looks set to register its weekly gain by the end of today’s trading session.

Central Bank Notes:

• The RBA reduced its cash rate by 25 basis points (bps), bringing it down to 3.85% on 20 May, following a pause on 1 April.
• 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.
• Data on inflation for the March quarter provided further evidence that inflation continues to ease. At 2.9%, annual trimmed mean inflation was below 3% for the first time since 2021 and headline inflation, at 2.4%, remained within the target band of 2 to 3%.
• While recent tariff announcements have resulted in a rebound in financial market prices, there is still considerable uncertainty about the final scope of the tariffs and policy responses in other countries, contributing to a weaker outlook for growth, employment and inflation in Australia.
• Private domestic demand appears to have been 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 suggests that labour market conditions remain tight. Employment is continuing to grow, 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.
• Looking through quarterly volatility, wage growth has softened over the past year or so but productivity growth has not picked up and growth in unit labour costs remains high.
• There are uncertainties about the outlook for domestic economic activity and inflation stemming from both domestic and international developments. While the central projection is for growth in household consumption to continue to increase as real incomes rise, recent data suggest that the pick-up will be a little slower than was expected three months ago.
• There is a risk that any pick-up in consumption is even slower than this, resulting in continued subdued growth in aggregate demand and a sharper deterioration in the labour market than currently expected.
• With inflation expected to remain around target, the Board therefore judged that an easing in monetary policy at this meeting was appropriate, assessing that this move would make monetary policy somewhat less restrictive.
• The Board will be attentive to the data and the evolving assessment of risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.
• The next meeting is on 8 July 2025.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

Retail Sales (10:45 pm GMT 22nd May)

What can we expect from NZD today?

Consumer spending in New Zealand had been deteriorating since the beginning of 2022 but retail sales jumped at a quarterly rate of 0.9% in the final quarter of last year. Not only did this increase surpass market forecasts of a 0.6% gain, but it also marked the highest receipts in three years. This upward momentum in consumer spending continued in the first quarter of this year as sales rose 0.8% QoQ and outperformed market expectations of a 0.1% increase. The largest contributors to the rise were motor vehicle and parts retailing, pharmaceutical and other store-based retailing, and clothing, footwear, and personal accessories. Stronger sales should spur further demand for the Kiwi, keeping this currency pair elevated on the final day of trading.

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

Medium Bullish

The Japanese Yen (JPY)

Key news events today

National Core CPI (11:30 pm GMT 22nd May)

What can we expect from JPY today?

Japan’s National Core CPI has now accelerated for the second successive month, rising from an annual rate of 3.2% in the prior month to 3.5% in April, surpassing the forecast of a 3.4% increase. The rising price pressures are attributed to a culmination of factors such as surging food prices, reduced energy subsidies and higher import costs. Coupled with ongoing demand for safe-haven assets, the yen continued to see strong inflows with USD/JPY hitting an overnight low of 142.80 before settling around 143.80 in early trading on Friday.

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

Medium Bearish

The Euro (EUR)

Key news events today

Germany GDP (6:00 am GMT)

What can we expect from EUR today?

Germany’s economy expanded by 0.2% in the first quarter of 2025, in line with market forecasts and rebounding from a 0.2% contraction in the previous quarter, according to preliminary data. This recovery was driven by softer inflation and reduced borrowing costs, which supported stronger domestic demand. Both business and consumer confidence improved, buoyed by optimism over the successful completion of coalition negotiations and the establishment of a stable government – factors that helped counterbalance persistent concerns about unpredictable U.S. tariff policies.

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

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Rising U.S. debt levels and credit downgrades continue to spur demand for safe-haven assets such as the franc. USD/CHF had declined over 1.5% by Wednesday before finding its footing around 0.8280 on Thursday. Inflows for the franc remain strong and this currency pair is likely to resume its downward momentum on the final trading day of the week.

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

Medium Bearish

The Pound (GBP)

Key news events today

Retail Sales (6:00 am GMT)

What can we expect from GBP today?

Consumer spending in the U.K. has slowed for two successive months with sales rising just 0.4% MoM in March – categories such as clothing and garden supplies stores led the gains. This trend is expected to gain further traction as the forecast for April points to another ‘soft’ increase of just 0.3%. Despite a slowdown in retail sales in 2025, Cable remains lifted due to the broad weakness in the greenback.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 5 to 4 to reduce the Bank Rate by 25 basis points (bps), bringing it down to 4.25% on 8 May 2025.
• Two members preferred a larger cut of 50 bps, while two opted to hold rates steady at 4.5%.
• 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.
• Progress on disinflation in domestic price and wage pressures is generally continuing. Twelve-month CPI inflation fell to 2.6% in March from 2.8% in February, close to expectations in the February Report.
• Although indicators of pay growth remain elevated, a significant slowing is still expected over the rest of the year.
• Wholesale energy prices have fallen back since the February Report. Previous increases in energy prices are still likely to drive up CPI inflation from April onwards, to 3.5% for 2025 Q3, but is expected to fall back thereafter.
• Underlying UK GDP growth is judged to have slowed since the middle of 2024 and has been much less volatile than growth in headline GDP – growth was expected to have been around zero in 2025 Q1, well below Bank staff’s projection for headline growth of 0.6%.
• Underlying employment growth has also softened recently and the labour market has continued to loosen. The ratio of vacancies to unemployment has fallen further and is now judged to be below its equilibrium level – the impact of higher Employers’ National Insurance Contributions (NICs) on employment appears to have been fairly small to date.
• 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 19 June 2025.

Next 24 Hours Bias

Medium Bullish

The Canadian Dollar (CAD)

Key news events today

Retail Sales (12:30 pm GMT)

What can we expect from CAD today?

After declining in January and February, retail sales in Canada rose by 0.7% MoM in March, according to preliminary estimates. The largest increases were seen in categories such as food and beverage retailers, and miscellaneous store retailers. The final estimate now points to consumer spending growing at a monthly rate of 0.6%, slightly lower than the preliminary estimate. Should sales slow more than originally anticipated, this result could weigh on the Loonie 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 Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

After gaining 9.2% over the last couple of weeks, oil prices are now expected to register a third decline in five weeks due to oversupply concerns. Earlier this month, OPEC+ agreed to accelerate oil output hikes for a second consecutive month in June as the group looks to punish over-producing members. OPEC leaders are also contemplating a similar increase in July, and could bring back as much as 2.2 million barrels-per-day (bpd) of supply to the market by November, as per a Reuters report. A secondary objective of the OPEC+ supply hikes is to win back market share from U.S. producers, who ramped up output to record levels in recent years while the OPEC+ was making deep supply cuts. Following a high of $64.19 on Wednesday, WTI oil tumbled over 6% by the end of Thursday – this benchmark had stabilised around $60.80 per barrel in early trading on Friday but the downward momentum is likely to pick up as the final trading day progresses.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 23 May 2025 first appeared on IC Markets | Official Blog.

• Prior +0.2%

That’s even better than the preliminary estimates and makes sense given the ECB rate cuts and fiscal boost. We should see even better figures going forward.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior +0.4% (revised to +0.1%)
• Retail sales +5.0% vs +4.5% y/y expected
• Prior +2.6% (revised to +1.9%)
• Retail sales ex autos, fuel +1.3% vs 0.3% m/m expected
• Prior +0.5% (revised to +0.2%)
• Retail sales ex autos, fuel +5.3% vs +4.4% y/y expected
• Prior +3.3% (revised to +2.6%)

These are very strong numbers. Not sure why the BoE keeps cutting when they are so far from their target.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• I see a June rate cut and then pause.

After June, the next fully priced in cut is in December.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Global Markets:

•  Asian Stock Markets : Nikkei up 0.48%, Shanghai Composite up 0.01%, Hang Seng up 0.71% ASX up 0.20%
• Commodities : Gold at $3318.35 (0.39%), Silver at $33.38 (0.19%), Brent Oil at $64.8 (-0.29%), WTI Oil at $60.6 (-0.29%)
• Rates : US 10-year yield at 4.537, UK 10-year yield at 4.7500, Germany 10-year yield at 2.6375

News & Data:

• (USD) Unemployment Claims 227K  to 230K expected

Markets Update:

Asia-Pacific markets mostly advanced on Friday as investors digested a range of regional economic data. Japan led the gains, with the Nikkei 225 rising 1.04% and the Topix climbing 0.89%. South Korea’s Kospi edged up 0.36%, though the Kosdaq dipped 0.34%. In Australia, the S&P/ASX 200 gained 0.33%. Meanwhile, Hong Kong’s Hang Seng index and China’s CSI 300 were flat at the open.

Markets also responded to news that the U.S. and China have agreed to maintain dialogue, following a call between Chinese Vice Foreign Minister Ma Zhaoxu and U.S. Deputy Secretary Christopher Landau, as confirmed by China’s Foreign Ministry.

On the economic front, Japan’s core inflation rose to 3.5% in April, driven partly by higher rice prices. The data comes as the Bank of Japan weighs a possible pause in its rate hikes amid uncertainty around U.S. tariffs. Investors are also analyzing South Korea’s April Producer Price Index and New Zealand’s first-quarter retail sales.

Singapore reported a 0.7% year-on-year rise in April core inflation, exceeding the 0.5% forecast by Reuters.

In the U.S., stock futures were little changed. Dow futures inched up 14 points (0.03%), S&P 500 futures rose 0.03%, and Nasdaq 100 futures were slightly lower. Overnight, Wall Street closed mixed amid concerns over rising interest rates and the growing U.S. deficit. The 30-year Treasury yield reached a new high since 2023. The Dow slipped slightly by 1.35 points, while the S&P 500 fell 0.04%. The Nasdaq rose 0.28%.

Upcoming Events: 

• 12:30 PM GMT – CAD Core Retail Sales m/m
• 12:30 PM GMT – CAD Retail Sales m/m

The post Friday 23rd May 2025: Asia-Pacific Stocks Rise Amid Economic Data first appeared on IC Markets | Official Blog.

The post Ex-Dividend 23/5/2025 first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

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. Additionally, the price is below the Ichimoku Cloud, which adds further significance to the strength of the Bearish momentum.

Pivot: 100.27

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

1st support: 99.03

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

1st resistance: 101.93
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

EUR/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 1.1264

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

 1st support: 1.1087
Supporting reasons: Identified as an overlap support that aligns close to the 61.8% Fibonacci retracement, indicating a potential area where the price could stabilize once more.

1st resistance: 1.1424

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

EUR/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 163.32

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

1st support: 160.95
Supporting reasons: Identified as an overlap support, which aligns with the 78.6% Fibonacci projection, indicating a potential area where the price could stabilize once again.

1st resistance: 164.97
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP: 

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: 0.8462

Supporting reasons: Identified as a pullback resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify. 

1st support: 0.8397
Supporting reasons: Identified as a swing-low support, indicating a potential area where the price could stabilize once more.

1st resistance: 0.8527
Supporting reasons: Identified as an overlap resistance that aligns with a 38.2% Fibonacci retracement, indicating a potential level that could cap further upward movement.

GBP/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: 1.3447

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

1st support: 1.3317
Supporting reasons: Identified as a pullback support, indicating a potential area where the price could stabilize once more.

1st resistance: 1.3631
Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension, indicating a potential level that could cap further upward movement.

GBP/JPY:

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: 191.58

Supporting reasons: Identified as a pullback support that aligns close to the 38.2% Fibonacci retracement and the 78.6% Fibonacci projection, indicating a potential area where buying interests could pick up to stage a rebound. 

1st support: 189.41

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

1st resistance: 194.81
Supporting reasons: Identified as a pullback resistance, indicating a potential level that could cap further upward movement.

USD/CHF:

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. Additionally, the price is below the Ichimoku Cloud, which adds further significance to the strength of the Bearish momentum.

Pivot: 0.8315

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

1st support: 0.8197
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 again.

1st resistance: 0.8453
Supporting reasons: Identified as a swing-high resistance, indicating a potential level that could cap further upward movement.

USD/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. 

Pivot: 142.58

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

1st support: 140.19
Supporting reasons: Identified as a swing-low support, suggesting a potential area where the price could stabilize once more.

1st resistance: 145.92
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Neutral

Price has made a bearish reversal off the pivot and could potentially fall toward the 1st support.

Pivot: 1.3894

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

1st support: 1.3770
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where the price could stabilize once more.

1st resistance: 1.4004
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: Neutral

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

Pivot: 0.6353
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.

1st support: 0.6237

Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement, suggesting a potential area where the price could stabilize once again.

1st resistance: 0.6502
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 127.2% Fibonacci extension, indicating a potential area that could halt any further upward movement.

NZD/USD

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: 0.5830
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 0.5762

Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement, suggesting a potential area where the price could stabilize once more.

1st resistance: 0.5969

Supporting reasons: Identified as a multi-swing-high 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: 41,520.25

Supporting reasons:  Identified as a pullback 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 this support zone.

1st support: 40,705.74

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

1st resistance: 42,740.30

Supporting reasons: Identified as a multi-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: 23,438.30
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: 22,533.30

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

1st resistance: 24,749.87
Supporting reasons: Identified as a resistance that aligns with a 127.2% Fibonacci extension, 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: 5,773.00

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: 5,586.50

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

1st resistance: 6,006.40

Supporting reasons: Identified as an overlap 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: 107,885.04
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: 102,104.63
Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once more.

1st resistance: 117,003.30
Supporting reasons: Identified as a resistance that aligns with the 100% Fibonacci projection, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 2,688.07
Supporting reasons: Identified as a swing-high resistance, indicating a potential area where selling pressures could intensify.

1st support: 2,304.82
Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once again.

1st resistance: 2,855.60
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

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: 59.47

Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

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: 63.39
Supporting reasons: Identified as a multi-swing-high resistance, 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 fall toward the pivot and 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: 3262.30

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

1st support: 3155.43
Supporting reasons: Identified as an overlap support, acting as a potential level where price could stabilize once again.

1st resistance: 3360.03
Supporting reasons: Identified as a pullback resistance that aligns close to the 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

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The post Friday 23rd May 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 23 May 2025

What happened in the U.S. session?

After surging to 241,000 in the final week of April, unemployment claims settled around 230,000 over the last couple of weeks. For the week ending May 17th, claims fell by 2,000 to 227,000, marking the lowest level in four weeks and coming in below analysts’ forecasts of 230,000. This outcome demonstrates continued resilience in the U.S. labour market, even as high interest rates and ongoing policy uncertainty contribute to business pessimism, as reflected by key economic indicators. 

Meanwhile, the S&P Global U.S. Composite PMI increased from 50.6 in the prior month to 52.1 in May, indicating a slight uptick in business activity, though growth was still subdued compared to historical norms. This marked the strongest reading since March, but remained among the weakest since early 2024. While business confidence and expectations for future output improved from April’s lows, they stayed restrained amid ongoing tariff concerns. Companies noted that tariffs were dampening demand, disrupting supply chains, and pushing up costs. Export orders continued to fall, particularly in the services sector, and supply chain delays worsened. Prices for goods and services climbed at the fastest rate since August 2022, mainly due to higher costs from tariffs. In response, manufacturers increased their input inventories at a record rate to protect against further disruptions. Despite the recent improvement in activity, the overall outlook remains cautious because of ongoing inflationary pressures and trade-related uncertainties.

What does it mean for the Asia Session?

Consumer spending in New Zealand had been deteriorating since the beginning of 2022 but retail sales jumped at a quarterly rate of 0.9% in the final quarter of last year. Not only did this increase surpass market forecasts of a 0.6% gain, but it also marked the highest receipts in three years. This upward momentum in consumer spending continued in the first quarter of this year as sales rose 0.8% QoQ and outperformed market expectations of a 0.1% increase. The largest contributors to the rise were motor vehicle and parts retailing, pharmaceutical and other store-based retailing, and clothing, footwear, and personal accessories. Stronger sales should spur further demand for the Kiwi, keeping this currency pair elevated on the final day of trading.

Japan’s National Core CPI has now accelerated for the second successive month, rising from an annual rate of 3.2% in the prior month to 3.5% in April, surpassing the forecast of a 3.4% increase. The rising price pressures are attributed to a culmination of factors such as surging food prices, reduced energy subsidies and higher import costs. Coupled with ongoing demand for safe-haven assets, the yen continued to see strong inflows with USD/JPY hitting an overnight low of 142.80 before settling around 143.80 in early trading on Friday.

The Dollar Index (DXY)

Key news events today

New Home Sales (2:00 pm GMT)

What can we expect from DXY today?

Following a drop of 9.2% MoM in January, sales for new homes rebounded in February and March, rising at a monthly rate of 3.1% and 7.4% respectively, with 724,000 units sold in the most recent data point. However, April’s forecast points to a decline in sales with 694,000 homes projected to be snapped up, marking a potential decline of 4.1%. Should new home sales fall more than originally anticipated, the dollar could come under even further overhead pressures.

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 7 May 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 further.
• The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.
• Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilised 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 would be 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 17 to 18 June 2025.

Next 24 Hours Bias

Medium Bearish

Gold (XAU)

Key news events today

New Home Sales (2:00 pm GMT)

What can we expect from Gold today?

Following a drop of 9.2% MoM in January, sales for new homes rebounded in February and March, rising at a monthly rate of 3.1% and 7.4% respectively, with 724,000 units sold in the most recent data point. However, April’s forecast points to a decline in sales with 694,000 homes projected to be snapped up, marking a potential decline of 4.1%. Should new home sales fall more than originally anticipated, the dollar could come under even further overhead pressures. After rallying more than 4% this week, demand for gold dampened slightly on Thursday as spot prices retreated from the overnight high of $3,345/oz. This precious metal was hovering around $3,300/oz at the beginning of Friday’s Asia session but it looks set to close in the green for the second time in three weeks.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Despite a slowdown in Composite PMI activity for the second consecutive month as reported in Thursday’s flash report, the Aussie remained elevated as it hovered above 0.6400, primarily due to a significant weakness in the greenback. After declining over the last couple of weeks, this currency pair looks set to register its weekly gain by the end of today’s trading session.

Central Bank Notes:

• The RBA reduced its cash rate by 25 basis points (bps), bringing it down to 3.85% on 20 May, following a pause on 1 April.
• 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.
• Data on inflation for the March quarter provided further evidence that inflation continues to ease. At 2.9%, annual trimmed mean inflation was below 3% for the first time since 2021 and headline inflation, at 2.4%, remained within the target band of 2 to 3%.
• While recent tariff announcements have resulted in a rebound in financial market prices, there is still considerable uncertainty about the final scope of the tariffs and policy responses in other countries, contributing to a weaker outlook for growth, employment and inflation in Australia.
• Private domestic demand appears to have been 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 suggests that labour market conditions remain tight. Employment is continuing to grow, 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.
• Looking through quarterly volatility, wage growth has softened over the past year or so but productivity growth has not picked up and growth in unit labour costs remains high.
• There are uncertainties about the outlook for domestic economic activity and inflation stemming from both domestic and international developments. While the central projection is for growth in household consumption to continue to increase as real incomes rise, recent data suggest that the pick-up will be a little slower than was expected three months ago.
• There is a risk that any pick-up in consumption is even slower than this, resulting in continued subdued growth in aggregate demand and a sharper deterioration in the labour market than currently expected.
• With inflation expected to remain around target, the Board therefore judged that an easing in monetary policy at this meeting was appropriate, assessing that this move would make monetary policy somewhat less restrictive.
• The Board will be attentive to the data and the evolving assessment of risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.
• The next meeting is on 8 July 2025.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

Retail Sales (10:45 pm GMT 22nd May)

What can we expect from NZD today?

Consumer spending in New Zealand had been deteriorating since the beginning of 2022 but retail sales jumped at a quarterly rate of 0.9% in the final quarter of last year. Not only did this increase surpass market forecasts of a 0.6% gain, but it also marked the highest receipts in three years. This upward momentum in consumer spending continued in the first quarter of this year as sales rose 0.8% QoQ and outperformed market expectations of a 0.1% increase. The largest contributors to the rise were motor vehicle and parts retailing, pharmaceutical and other store-based retailing, and clothing, footwear, and personal accessories. Stronger sales should spur further demand for the Kiwi, keeping this currency pair elevated on the final day of trading.

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

Medium Bullish

The Japanese Yen (JPY)

Key news events today

National Core CPI (11:30 pm GMT 22nd May)

What can we expect from JPY today?

Japan’s National Core CPI has now accelerated for the second successive month, rising from an annual rate of 3.2% in the prior month to 3.5% in April, surpassing the forecast of a 3.4% increase. The rising price pressures are attributed to a culmination of factors such as surging food prices, reduced energy subsidies and higher import costs. Coupled with ongoing demand for safe-haven assets, the yen continued to see strong inflows with USD/JPY hitting an overnight low of 142.80 before settling around 143.80 in early trading on Friday.

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

Medium Bearish

The Euro (EUR)

Key news events today

Germany GDP (6:00 am GMT)

What can we expect from EUR today?

Germany’s economy expanded by 0.2% in the first quarter of 2025, in line with market forecasts and rebounding from a 0.2% contraction in the previous quarter, according to preliminary data. This recovery was driven by softer inflation and reduced borrowing costs, which supported stronger domestic demand. Both business and consumer confidence improved, buoyed by optimism over the successful completion of coalition negotiations and the establishment of a stable government – factors that helped counterbalance persistent concerns about unpredictable U.S. tariff policies.

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

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Rising U.S. debt levels and credit downgrades continue to spur demand for safe-haven assets such as the franc. USD/CHF had declined over 1.5% by Wednesday before finding its footing around 0.8280 on Thursday. Inflows for the franc remain strong and this currency pair is likely to resume its downward momentum on the final trading day of the week.

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

Medium Bearish

The Pound (GBP)

Key news events today

Retail Sales (6:00 am GMT)

What can we expect from GBP today?

Consumer spending in the U.K. has slowed for two successive months with sales rising just 0.4% MoM in March – categories such as clothing and garden supplies stores led the gains. This trend is expected to gain further traction as the forecast for April points to another ‘soft’ increase of just 0.3%. Despite a slowdown in retail sales in 2025, Cable remains lifted due to the broad weakness in the greenback.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 5 to 4 to reduce the Bank Rate by 25 basis points (bps), bringing it down to 4.25% on 8 May 2025.
• Two members preferred a larger cut of 50 bps, while two opted to hold rates steady at 4.5%.
• 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.
• Progress on disinflation in domestic price and wage pressures is generally continuing. Twelve-month CPI inflation fell to 2.6% in March from 2.8% in February, close to expectations in the February Report.
• Although indicators of pay growth remain elevated, a significant slowing is still expected over the rest of the year.
• Wholesale energy prices have fallen back since the February Report. Previous increases in energy prices are still likely to drive up CPI inflation from April onwards, to 3.5% for 2025 Q3, but is expected to fall back thereafter.
• Underlying UK GDP growth is judged to have slowed since the middle of 2024 and has been much less volatile than growth in headline GDP – growth was expected to have been around zero in 2025 Q1, well below Bank staff’s projection for headline growth of 0.6%.
• Underlying employment growth has also softened recently and the labour market has continued to loosen. The ratio of vacancies to unemployment has fallen further and is now judged to be below its equilibrium level – the impact of higher Employers’ National Insurance Contributions (NICs) on employment appears to have been fairly small to date.
• 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 19 June 2025.

Next 24 Hours Bias

Medium Bullish

The Canadian Dollar (CAD)

Key news events today

Retail Sales (12:30 pm GMT)

What can we expect from CAD today?

After declining in January and February, retail sales in Canada rose by 0.7% MoM in March, according to preliminary estimates. The largest increases were seen in categories such as food and beverage retailers, and miscellaneous store retailers. The final estimate now points to consumer spending growing at a monthly rate of 0.6%, slightly lower than the preliminary estimate. Should sales slow more than originally anticipated, this result could weigh on the Loonie 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 Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

After gaining 9.2% over the last couple of weeks, oil prices are now expected to register a third decline in five weeks due to oversupply concerns. Earlier this month, OPEC+ agreed to accelerate oil output hikes for a second consecutive month in June as the group looks to punish over-producing members. OPEC leaders are also contemplating a similar increase in July, and could bring back as much as 2.2 million barrels-per-day (bpd) of supply to the market by November, as per a Reuters report. A secondary objective of the OPEC+ supply hikes is to win back market share from U.S. producers, who ramped up output to record levels in recent years while the OPEC+ was making deep supply cuts. Following a high of $64.19 on Wednesday, WTI oil tumbled over 6% by the end of Thursday – this benchmark had stabilised around $60.80 per barrel in early trading on Friday but the downward momentum is likely to pick up as the final trading day progresses.

Next 24 Hours Bias

Medium Bearish

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

• Japan PM Ishiba: No change to our stance on U.S. tariffs
• Japan Prime Minister Ishiba held phone talks with Trump
• China Council for Promotion of International Trade president met with JP Morgan CEO Dimon
• Iran’s Foreign Minister lays down conditions for a deal with the US ahead of weekend talks
• S&P 500 Futures Analysis Today
• TSMC warns US chip tariffs could undermine its Arizona investment
• Chinese Vice Foreign Minister Ma Zhaoxu & US Deputy Sec State Landau spoke Thursday
• The USD is losing some ground in Asian trade
• PBOC sets USD/ CNY reference rate for today at 7.1919 (vs. estimate at 7.2151)
• Japan Akazawa: Japan to request elimination of US tariffs, but want to reach agreement
• Major US banks are exploring whether to team up to issue a joint stablecoin
• Japan’s new farm minister aims to cut 5kg rice prices below ¥3,000
• Japan economy minister Akazawa heading back to the US around May 30 for more trade talks
• Federal Reserve Chair Powell is speaking on Sunday
• US economy to worsen in H2 2025 … ‘payback’ time
• Japan April CPI remains well above the Bank of Japan target rate
• UK consumer confidence improves a little in May, still deeply pessimistic at -20
• US Deputy Secretary of State spoke with Chinese counterpart on Thursday
• New Zealand Retail Sales Q1 2025 0.7% y/y (prior 0.2%), 0.8% q/q (expected 0.1%)
• UBS lifts S&P 500 target on strong earnings and economic outlook
• ECB’s Lagarde says must question links of dependency that we have with the United States
• JP Morgan highlights signs of recovery and renewed foreign interest in China
• ICYMI – Morgan Stanley expects the S&P 500 to reach 6,500 by mid-2026
• US Supreme Court allows Trump to fire heads of independent agencies, does not apply to Fed
• Trade ideas thread – Friday, 23 May, insightful charts, technical analysis, ideas
• Japan Kato: There were comments from some G7 countries about need to ensure fiscal health
• BoJ Governor Ueda says shared with G7 that should be highly committed to price stability
• Stocks close mixed with the Dow and S&P little changed. Nasdaq higher.
• Reserve Bank of New Zealand expected to cut its cash rate on May 28, almost unanimous view
• Forexlive Americas FX news wrap: Yields reverse lower, bitcoin hits record near $112K

The US dollar lost ground across the major FX board during the session. Concerns over US debt persist following the Moody’s downgrade, and while the House’s passage of Trump’s tax bill on Thursday may offer a short-term economic boost, it has reignited worries about the long-term consequences of ballooning debt.

From Canada, where the G7 is finishing, we heard again from Bank of Japan Governor Ueda. He reaffirmed the Bank’s hands-off stance on Japanese Government Bonds, even as yields on super-long dated securities climb to record highs. His comments align with those of BoJ Board member Noguchi, who said the Bank should only ramp up bond purchases during “severe market disruption.”

Japan’s April inflation data came in later, with core consumer prices rising 3.5% year-on-year—the fastest pace in over two years. This puts pressure on the BoJ to consider rate hikes, though Trump’s tariff war is posing new headwinds to growth.

On trade, Economy Minister Akazawa is due back in Washington around May 30 for a fourth round of talks. Both he and Prime Minister Ishiba reiterated Japan’s demand for US tariff removal, while also emphasising Japan’s national interests. Akazawa expressed a desire to reach an agreement—but it won’t be easy.

Looking to the weekend, indirect nuclear talks between Iran and the US are set to resume in Rome. Iran’s Foreign Minister laid out stark terms:

• “Zero nuclear weapons = we DO have a deal. Zero enrichment = we do NOT have a deal.”

Expect headlines early Monday in Asian markets, with oil likely to react.

Also on deck is a speech from Fed Chair Jerome Powell on Sunday. While he’s unlikely to address the economic outlook or policy directly (see earlier post for context), it’s worth noting he’ll be speaking.

Lastly, US debt concerns continue to ripple globally. Bangko Sentral ng Pilipinas Governor Eli Remolona is reportedly considering reducing Philippine holdings of US Treasuries, according to Bloomberg, following the Moody’s downgrade. If he’s thinking it, others likely are too.

EUR/USD rose during the session:

This article was written by Eamonn Sheridan at www.forexlive.com.

• Trump pushes EU to cut tariffs or face extra duties.
• US trade representative Greer preparing to tell EU counterpart Sefcovic that recent “explanatory note” falls short of US expectations.
• US negotiators to tell Brussels they expect unilateral concessions.

Well, it’s been pretty clear that trade deals with EU and Japan were going to be harder since the two countries took a more hardline stance on tariffs compared to UK for example. The EU has been repeating that they won’t accept 10% as a baseline for tariffs.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Stocks Quiet as Investors Assess Tax Bill – Nasdaq up 0.3%

US stock markets experienced another quieter day yesterday as investors continued to assess the government’s tax bill, which passed in the House of Representatives by just one vote. The Dow closed flat on the day, the S&P edged just 0.04% lower, and the Nasdaq gained 0.28%. Treasury yields closed lower, the 2-year down 2.8 basis points to 3.991% and the 10-year down 7 basis points to 4.529%, whilst the dollar pulled back some of its recent losses, the DXY up 0.3% to 99.94. Oil prices dropped on a report that OPEC+ will look at further production increases in July, Brent down 1.40% to $64.00 and WTI off 0.60% to $61.20. Gold drifted lower over the course of the day, closing down 0.66% at $3,294.09.

FX Majors to Break Out of Ranges

Most of the major FX pairs have been stuck in relatively tight ranges for the last week or so; however, traders are not expecting them to last too long. With the exception of the USDJPY, the major currencies have been trading with much less volatility than we have seen over the course of the year, albeit near the lows in USD terms. The market is now waiting for the next catalyst to move them either into fresh ranges and to continue the recent dollar weakness trend, or to pull back into dollar strength. The likelihood is that updates on trade, which have been dominating FX moves in the last few months, will be the catalyst for those moves, with good news and reduced tariffs likely to result in dollar strength, and further tariff implementation and global trade disruption likely to see the dollar enter fresh downside regions.

Retail Sales Data in Focus Today

Retail Sales numbers are in focus for investors today, and they will be getting close attention from analysts looking to see if tariffs across the globe have started to affect consumer sentiment. New Zealand Retail Sales data has already been released early in the Asian session, coming in well below expectations, printing 0.0% against an expected 0.9% q/q, but there has so far been little reaction in the Kiwi dollar. The focus will again be on the pound early in the European session with UK Retail Sales numbers due out; expectation is for a 0.3% month-on-month increase. The New York session will see the initial focus north of the border for Canadian Retail Sales data; the headline number is expected to show a m/m 0.2% increase, but the Core data a 0.3% decrease, and traders are anticipating good moves in the Loonie around the release. US New Home Sales are out later in the session, but once again, investors are expecting the newswires to provide more volatility.

The post General Market Analysis – 23/05/25 first appeared on IC Markets | Official Blog.

Japan PM Ishiba on his call with Trump

• No change to our stance on U.S. tariffs
• Discussed U.S. tariffs with President Trump
• Discussed diplomacy, security with Trump as well
• There might be occasion where I’ll visit U.S. for in-person talks with President Trump
• No change to our stance of demanding elimination of tariffs
• No change to our policy of talking with U.S. on creating U.S. jobs

Earlier from Japan re tariffs talks:

• Japan economy minister Akazawa heading back to the US around May 30 for more trade talks

• Japan Akazawa: Japan to request elimination of US tariffs, but want to reach agreement

This article was written by Eamonn Sheridan at www.forexlive.com.