IC Markets Asia Fundamental Forecast | 24 June 2025
What happened in the U.S. session?
Composite PMI activity in the U.S. edged lower from 53 in the prior month to 52.8 in June, based on flash estimates. Although it marked the 29th consecutive month of expansion, the latest print signalled a slight cooling in private sector growth. Service sector output eased modestly but remained robust, while manufacturing held steady at a 15-month high. Business activity and new orders continued to grow, but momentum weakened as exports of both goods and services declined amidst rising trade tariffs. Notably, service exports saw their steepest quarterly contraction since late 2022. Meanwhile, price pressures intensified in June, largely due to tariffs, but also reflected an increase in financing, wage, and fuel costs.
However, financial news headlines were dominated by an announcement by U.S. President Donald Trump claiming a ‘total ceasefire’ between Israel and Iran on his social media platform, Truth Social. Whether this ‘ceasefire’ will be respected by either party remains to be seen, but the risk premium for crude oil appears to be fading rapidly. After surging over 6% at yesterday’s open, WTI oil futures reversed sharply to dive nearly 18% overnight – this benchmark was hovering around $66 per barrel at the beginning of Tuesday’s Asia session.
What does it mean for the Asia Session?
The Bank of Japan’s (BoJ) core CPI is expected to edge higher in June, rising from an annual rate of 2.4% in the prior month to 2.5%. This follows last week’s acceleration in the National Core CPI, rising from an annual rate of 3.5% in the previous month to 3.7% in May. Another ‘hot’ inflation print could fuel further demand for the yen, which has already caused USD/JPY to reverse from Monday’s highs at 148 – this currency pair was falling steadily toward 145.50 as downward momentum gained further traction during Tuesday’s Asia hours.
The Dollar Index (DXY)
Key news events today
Fed Chair Powell’s Testimony (2:00 pm GMT)
CB Consumer Confidence (2:00 pm GMT)
What can we expect from DXY today?
Federal Reserve Chairman Jerome Powell will begin his 2-day testimony before the House Financial Services Committee in Washington D.C. later today. Powell will deliver his prepared remarks summarizing the key points of the Monetary Policy Report, including an overview of recent economic and financial developments, the current stance and outlook for monetary policy. Following his opening statement, the session shifts to questions from committee members.
In addition, the results of the Conference Board (CB) Consumer Confidence survey drops at the same time where May’s index rebounded partially in May, rising from 85.7 in April to 98.0 in May. The improved sentiment was largely driven by consumer expectations as all three components of the Expectations Index – business conditions, employment prospects, and future income – rose from April’s lows. However, while consumers were more positive about current business conditions than last month, their appraisal of current job availability weakened for the fifth consecutive month. June’s forecast points to another month of improved confidence, albeit at a slower pace – stronger consumer confidence could provide tailwinds for the dollar but volatility is to be expected due to Powell’s testimony.
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 18 June 2025.
- The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run; uncertainty around the economic outlook has diminished but remains elevated.
- The Committee is attentive to the risks to both sides of its dual mandate and judges that the unemployment rate remains low, labour market conditions remain solid, but inflation is somewhat elevated.
- Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace.
- GDP growth forecasts were revised downward for 2025 (1.4% vs. 1.7% in the March projection) while PCE inflation projections have been adjusted higher for 2025, with core inflation expected to reach 3.1% (vs. 2.8% in the March projection), 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 29 to 30 July 2025.
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
Fed Chair Powell’s Testimony (2:00 pm GMT)
CB Consumer Confidence (2:00 pm GMT)
What can we expect from Gold today?
Federal Reserve Chairman Jerome Powell will begin his 2-day testimony before the House Financial Services Committee in Washington D.C. later today. Powell will deliver his prepared remarks summarizing the key points of the Monetary Policy Report, including an overview of recent economic and financial developments, the current stance and outlook for monetary policy. Following his opening statement, the session shifts to questions from committee members.
In addition, the results of the Conference Board (CB) Consumer Confidence survey drops at the same time where May’s index rebounded partially in May, rising from 85.7 in April to 98.0 in May. The improved sentiment was largely driven by consumer expectations as all three components of the Expectations Index – business conditions, employment prospects, and future income – rose from April’s lows. However, while consumers were more positive about current business conditions than last month, their appraisal of current job availability weakened for the fifth consecutive month. June’s forecast points to another month of improved confidence, albeit at a slower pace – stronger consumer confidence could provide tailwinds for the dollar but volatility is to be expected due to Powell’s testimony. Gold prices will also be subjected to increased volatility during these events.
Next 24 Hours Bias
Medium Bearish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
After falling as low as 0.6372 at Monday’s open, the Aussie bounced strongly as it rose nearly 1.5%. With safe-haven demand for the greenback fading, this currency pair continued its upward trajectory toward the threshold of 0.6500 during Tuesday’s Asian trading hours.
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
No major news events.
What can we expect from NZD today?
The Kiwi dived toward 0.5880 at yesterday’s open before rebounding swiftly. As safe-haven demand for the greenback faded, this currency pair jumped 1.7% overnight and the strong tailwinds should remain intact on Tuesday.
Central Bank Notes:
- The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 25 basis points bringing it down to 3.25% on 28 May, marking the sixth consecutive rate cut.
- The Committee stated that annual consumer price index inflation increased to 2.5% in the first quarter of 2025 while inflation expectations across firms and households have also risen.
- However, core inflation is declining and there is spare productive capacity in the economy; these conditions are consistent with inflation returning to the mid-point of the 1 to 3% target band over the medium term.
- The New Zealand economy is recovering after a period of contraction as high commodity prices and lower interest rates are supporting overall economic activity but recent developments in the international economy are expected to reduce global economic growth.
- Both tariffs and increased policy uncertainty overseas are expected to moderate New Zealand’s economic recovery and reduce medium-term inflation pressures. However, there remains considerable uncertainty around these judgements.
- Labour market conditions remain weak while the unemployment rate is expected to peak this quarter at 5.2%.
- Inflation is within the target band, and the Committee is well placed to respond to domestic and international developments to maintain price stability over the medium term.
- The next meeting is on 9 July 2025.
Next 24 Hours Bias
Medium Bullish
The Japanese Yen (JPY)
Key news events today
BoJ Core CPI (5:00 am GMT)
What can we expect from JPY today?
The Bank of Japan’s (BoJ) core CPI is expected to edge higher in June, rising from an annual rate of 2.4% in the prior month to 2.5%. This follows last week’s acceleration in the National Core CPI, rising from an annual rate of 3.5% in the previous month to 3.7% in May. Another ‘hot’ inflation print could fuel further demand for the yen, which has already caused USD/JPY to reverse from Monday’s highs at 148 – this currency pair was falling steadily toward 145.50 as downward momentum gained further traction during Tuesday’s Asia hours.
Central Bank Notes:
- The Policy Board of the Bank of Japan decided on 17 June, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
- The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
- The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs. The scheduled amount of monthly long-term government bond purchases will, in principle, be reduced by about ¥400 billion each quarter from January to March 2026, and by about ¥200 billion each quarter from April to June 2026 onward, aiming for a level of around ¥2 trillion in January to March 2027.
- Japan’s economy, while showing some weak movements in certain areas, is recovering moderately. Overseas economies, though partly exhibiting weakness due to the effects of various countries’ trade policies, are generally growing at a moderate pace. Exports and industrial production, while showing some last-minute demand due to the U.S. tariff increases, are basically moving sideways.
- On the price front, looking at the year-on-year rate of change in consumer prices (excluding fresh food), the rate is currently in the mid-3% range, reflecting continued pass-through of wage increases to sales prices, as well as the effects of past rises in import prices and recent increases in food prices such as rice. Expected inflation rates are rising moderately.
- As for consumer prices (excluding fresh food), the effects of past import price increases and recent rises in food prices such as rice, which have pushed up inflation so far, are expected to wane. During this period, the underlying rate of increase in consumer prices may stagnate somewhat due to the slowdown in growth pace.
- Looking ahead, the Japanese economy is expected to slow its growth pace, as overseas economies decelerate due to the effects of various countries’ trade policies, putting downward pressure on Japanese corporate profits, etc., although accommodative financial conditions will provide some support. Thereafter, as overseas economies return to a moderate growth path, Japan’s growth rate is expected to increase.
- As the growth rate rises, labour shortages intensify, and medium- to long-term expected inflation rates rise, inflation is expected to gradually increase. In the latter half of the projection period in the “Outlook Report,” inflation is expected to move at a level generally consistent with the “price stability target”.
- There are various risk factors, but in particular, the outlook for the development of trade policies in various countries and the resulting uncertainty regarding overseas economic and price trends is extremely high. It is necessary to closely monitor the impact on financial and foreign exchange markets, as well as on Japan’s economy and prices.
- The next meeting is scheduled for 31 July 2025.
Next 24 Hours Bias
Medium Bearish
The Euro (EUR)
Key news events today
Germany ifo Business Climate (8:00 am GMT)
What can we expect from EUR today?
The ifo Business Climate for Germany edged up to 87.5 in May, the highest in eleven months, and slightly better than forecasts of 87.4. Business sentiment saw a notable improvement in the manufacturing sector, driven in particular by strong optimism in the food industry, with Ifo President Clemens Fuest stating “The recent sharp rise in uncertainty among companies has eased somewhat. The German economy is slowly regaining its footing”. This improvement is anticipated to gain further traction in June, which could provide additional tailwinds for the Euro.
Central Bank Notes:
- The Governing Council reduced the three key ECB interest rates by 25 basis points on 5 June to mark the seventh 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 2.15%, 2.40% and 2.00% respectively.
- Inflation is currently at around the Governing Council’s 2% medium-term target. In the baseline of the new Eurosystem staff projections, headline inflation is set to average 2.0% in 2025, 1.6% in 2026 and 2.0% in 2027. The downward revisions compared with the March projections, by 0.3 percentage points for both 2025 and 2026, mainly reflect lower assumptions for energy prices and a stronger euro. Staff expect inflation excluding energy and food to average 2.4% in 2025 and 1.9% in 2026 and 2027, broadly unchanged since March.
- Staff see real GDP growth averaging 0.9% in 2025, 1.1% in 2026 and 1.3% in 2027. The unrevised growth projection for 2025 reflects a stronger-than-expected first quarter combined with weaker prospects for the remainder of the year. While the uncertainty surrounding trade policies is expected to weigh on business investment and exports, especially in the short term, rising government investment in defence and infrastructure will increasingly support growth over the medium term.
- Higher real incomes and a robust labour market will allow households to spend more. Together with more favourable financing conditions, this should make the economy more resilient to global shocks. Wage growth is still elevated but continues to moderate visibly, and profits are partially buffering its impact on inflation.
- 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.
- 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, and it is not pre-committing to a particular rate path.
- 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 next meeting is on 24 July 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?
The franc gained 0.7% on Monday as demand for safe-haven assets surged on Monday due to the involvement of the U.S. in the Israel-Iran conflict. However, USD/CHF found its footing around 0.8110 as Asian markets came online on Tuesday. This currency pair could edge higher as geopolitical risk premiums appear to be fading.
Central Bank Notes:
- The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.25% to 0% on 19 June 2025, marking the sixth consecutive reduction.
- Inflationary pressure has decreased further as compared to the previous quarter, decreasing from 0.3% in February to -0.1% in May, mainly attributable to lower prices in tourism and oil products.
- Compared to March, the new conditional inflation forecast is lower in the short term. In the medium term, there is hardly any change from March, putting the average annual inflation at 0.2% for 2025, 0.5% for 2026 and 0.7% for 2027.
- The global economy continued to grow at a moderate pace in the first quarter of 2025 but the global economic outlook for the coming quarters has deteriorated due to the increase in trade tensions.
- Swiss GDP growth was strong in the first quarter of 2025, but this development was largely because, as in other countries, exports to the U.S. were brought forward.
- Following the strong first quarter, growth is likely to slow again and remain rather subdued over the remainder of the year; the SNB expects GDP growth of 1% to 1.5% for 2025 as a whole, while also anticipating GDP growth of 1% to 1.5% for 2026.
- 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 25 September 2025.
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
BoE Gov Bailey’s Testimony (2:00 pm GMT)
What can we expect from GBP today?
Bank of England (BoE) Governor Andrew Bailey will be testifying before the House of Lords Economic Affairs Committee in London today. The hearing will involve rigorous scrutiny of the BoE’s policies amid persistent inflation and global uncertainties. Key topics will include monetary policy, transparency in quantitative easing, and fiscal coordination. Depending on Bailey’s tone and policy signals, the pound could face higher volatility during this event.
Central Bank Notes:
- The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to maintain the Bank Rate at 4.25% on 19 June 2025, with three members preferring to reduce the Bank Rate by 25 basis points.
- 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 £100 billion over the next 12 months to a total of £558 billion, starting in October 2024. On 19 June 2025, the stock of UK government bonds held for monetary policy purposes was £590 billion.
- There has been substantial disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations.
- Twelve-month CPI inflation increased to 3.4% in May from 2.6% in March, in line with expectations in the May Monetary Policy Report. The rise was largely due to a range of regulated prices and previous increases in energy prices.
- Underlying UK GDP growth appears to have remained weak, and the labour market has continued to loosen, leading to clearer signs that a margin of slack has opened up over time.
- Measures of pay growth have continued to moderate and, as in May, the Committee expects a significant slowing over the rest of the year.
- Global uncertainty remains elevated while energy prices have risen owing to an escalation of the conflict in the Middle East, prompting the Committee to remain sensitive to heightened unpredictability in the economic and geopolitical environment.
- There remain two-sided risks to inflation. Given the outlook and continued disinflation, a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate and the Committee will continue to monitor closely the risks of inflation persistence and what the 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 7 August 2025.
Next 24 Hours Bias
Medium Bullish
The Canadian Dollar (CAD)
Key news events today
CPI (12:30 pm GMT)
What can we expect from CAD today?
Canada’s consumer inflation, as measured by the various metrics such as median-. trimmed- and common-CPI, is expected to moderate in May. Despite the impact of tariffs, price pressures appear to be modest so far. A ‘soft’ CPI print could put downward pressure on USD/CAD, but falling oil prices could keep it supported in the near-term.
Central Bank Notes:
- The Bank of Canada maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% on 4th June – marking the second consecutive meeting where rates were kept on hold.
- The Governing Council noted that the ongoing increase and decrease of various U.S. tariffs, coupled with highly uncertain outcomes of bilateral trade negotiations and tariff rates remaining well above their levels at the beginning of 2025, placed downside risks on growth and lifted inflation expectations, warranting caution regarding the continuation of monetary easing.
- The higher uncertainty stemmed from the absence of a clear tariff path by the U.S. and persistent threats of new trade actions, which prompted the BoC Governing Council to highlight risks such as the extent to which higher US tariffs reduce demand for Canadian exports.
- Canada’s economic growth in the first quarter came in at 2.2%, slightly stronger than the original forecast, while the composition of GDP growth was largely as expected. Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence.
- Housing activity was down, driven by a sharp contraction in resales, while government spending also declined. The economy is expected to be considerably weaker in the second quarter, with the strength in exports and inventories reversing and final domestic demand remaining subdued.
- The labour market has weakened, particularly in trade-intensive sectors, and unemployment has risen to 6.9% while CPI inflation eased to 1.7% in April, as the elimination of the federal consumer carbon tax reduced inflation by 0.6%.
- The Bank’s preferred measures of core inflation, as well as other measures of underlying inflation, moved up, while recent surveys indicate that households continue to expect that tariffs will raise prices and many businesses say they intend to pass on the costs of higher tariffs.
- 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.
- 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 30 July 2025.
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
API Crude Oil Stock (8:30 pm GMT)
What can we expect from Oil today?
Overnight headlines were dominated by an announcement by U.S. President Donald Trump claiming a ‘total ceasefire’ between Israel and Iran on his social media platform, Truth Social. Whether this ‘ceasefire’ will be respected by either party remains to be seen, but the risk premium for crude oil appears to be fading rapidly. After surging over 6% at yesterday’s open, WTI oil futures reversed sharply to dive nearly 18% overnight – this benchmark was hovering around $66 per barrel at the beginning of Tuesday’s Asia session. Moving over to U.S. inventories, the API stockpiles have drawn down strongly over the past four weeks, signalling higher demand for crude oil. This trend could extend in the latest report which could provide some near-term support for oil prices.
Next 24 Hours Bias
Medium Bearish
