IC Markets Asia Fundamental Forecast | 29 July 2025
What happened in the Asia session?
Large-cap U.S. equities (especially tech), risk assets, and Treasuries are supported by robust foreign inflows and steady policy signals. Market sentiment is being shaped by U.S. dollar dynamics, energy prices, Federal Reserve and tariff headlines, and sector performance as earnings and policy developments guide investor outlook. Overnight trading reflected renewed optimism around trade deals, continued strength in U.S. equities, persistent foreign demand for U.S. assets, and expectations for a pivotal week ahead in markets and macroeconomic policy.
What does it mean for the Europe & US sessions?
Tuesday’s session will be driven by the outcome of the U.S.–China trade talks in Stockholm and the IMF’s updated global economic outlook. With the August 12 deadline approaching and regional growth forecasts already downgraded, markets remain highly sensitive to trade policy developments. The combination of geopolitical uncertainty, central bank policy divergence, and seasonal weather impacts is creating a complex trading environment that requires careful risk management. Breaking news from the Stockholm talks, IMF forecast revisions, and any shifts in regional central bank rhetoric on the pace of monetary easing will be closely monitored.
The Dollar Index (DXY)
Key news events today
Jolts job openings (2:00 pm GMT)
CB consumer confidence (2:00 pm GMT)
What can we expect from DXY today?
The dollar’s strength on Tuesday is supporting U.S. equity futures and boosting Treasury demand, while pressuring commodity currencies and emerging market assets. Optimism over trade deal progress, combined with anticipation of this week’s Federal Reserve meeting, is driving renewed confidence in dollar-denominated assets and reversing some of the earlier weakness seen this year.
Bottom Line: The dollar enters Tuesday with strong momentum, fueled by trade deal progress and positioning ahead of key Fed policy decisions, marking a notable shift from its earlier 2025 weakness.
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
Weak Bearish
Gold (XAU)
Key news events today
Jolts job openings (2:00 pm GMT)
CB consumer confidence (2:00 pm GMT)
What can we expect from Gold today?
Gold is expected to trade sideways to slightly bearish on July 29, 2025, as recent trade deals ease global risk sentiment and equity markets attract capital flows. The metal remains supported above $3,300 due to ongoing inflation concerns and central bank buying, but lacks the momentum for a strong bullish move in the absence of fresh geopolitical or monetary shocks.
U.S.–China trade talks will resume in Stockholm, aiming to extend the current trade truce. Upcoming economic data releases, including PCE inflation figures that could influence Fed policy, and potential geopolitical developments may reignite safe-haven demand. Overall, gold faces continued pressure on Tuesday as trade deal optimism and dollar strength outweigh traditional safe-haven flows. The precious metal is testing key technical support levels while traders await Fed guidance and closely monitor the evolving global trade landscape.
Next 24 Hours Bias
Weak Bearish
The Australian Dollar (AUD)
Key news events today
No major news event
What can we expect from AUD today?
On Tuesday, July 29, 2025, the Australian dollar is under mild pressure—driven by profit-taking, a stronger US dollar, and caution ahead of both US and domestic inflation data. Larger moves are expected later in the week as Australia’s CPI is released and the Fed announces its latest policy stance. For now, the daily directional bias for the AUD remains weakly bearish to neutral, with traders staying defensive after a strong July performance.
The currency is consolidating, trading just below its 2025 highs while holding steady amid improved risk sentiment and cautious monetary policy expectations. Volatility may pick up in the latter half of the week as CPI and Fed-related headlines emerge. Key drivers continue to be domestic inflation figures, RBA guidance, and international trade developments.
Central Bank Notes:
- The RBA held its cash rate steady at 3.85% at the July meeting on 8 July 2025, following a 25bps reduction in May and line with widespread market expectations after recent data showed inflation tracking within the target band.
- Inflation continues to ease from its peak, with higher interest rates helping to rebalance demand and supply across the Australian economy. Data for the June quarter signalled ongoing progress, though underlying pressures persist in certain sectors.
- Trimmed mean inflation for the June quarter likely remained near 2.9% and headline CPI around 2.4%, both within the RBA’s 2–3% target range. The Board noted further evidence of inflation convergence, but flagged that not all price categories are moving in tandem.
- Financial markets have shown increased volatility in the wake of global tariff and trade policy developments—especially as a result of recent U.S. and EU announcements. This has pushed asset prices higher but contributed to an uncertain outlook for domestic growth and employment.
- Private domestic demand showed a tentative recovery. Real household incomes improved and signs of easing household financial stress emerged, but some business sectors continued to face subdued demand, limiting their ability to pass on cost increases.
- Labour market conditions remained tight overall. Employment continued to expand, with low rates of underutilisation. Business surveys suggest labour availability remains a constraint, though there are signs of a gradual easing compared to earlier in 2025.
- Underlying wage growth softened modestly, though unit labour cost growth remains elevated due to below-trend productivity gains. The Board remains attentive to developments in wage and productivity dynamics as cost pressures continue to evolve.
- Uncertainties persist for both domestic activity and inflation. Consumption growth has risen, but more slowly than anticipated three months ago, with global and domestic factors both contributing to the cautious outlook.
- There remains a risk that household spending picks up more slowly than forecast, which could result in ongoing subdued aggregate demand and a sharper deterioration in employment conditions.
- Given that inflation is expected to remain around the target band, the Board judged that it was appropriate to keep policy settings unchanged in July, maintaining a position that is still mildly restrictive.
- The Board continues to monitor all incoming data and assesses risks carefully, with a focus on global trends, domestic demand indicators, inflation outcomes, and the labour market outlook.
- The RBA remains committed to its mandate of price stability and full employment and stands ready to adjust policy as needed to achieve these objectives.
- The next meeting is on August 11–12 2025.
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from NZD today?
The NZD is consolidating near the lower end of its July range, weighed down by expectations of a potential RBNZ rate cut and lingering global trade uncertainty. Key focus in the coming session will be on developments in international trade talks, shifts in risk sentiment, and signals from central banks. Near-term direction remains neutral to slightly bearish, with a cautious outlook following recent declines and the absence of fresh local data catalysts.
On Monday, the New Zealand dollar rose toward $0.602, snapping a two-day decline as investors assessed a possible extension of the US-China tariff pause and the newly announced US-EU trade deal. US and Chinese negotiators are set to meet in Stockholm later today, aiming to prolong the truce that has kept sharply higher tariffs at bay ahead of the August 12 deadline.
Central Bank Notes:
- The Monetary Policy Committee (MPC) agreed to hold the Official Cash Rate (OCR) at 3.25% on 9 July, marking the first pause following six consecutive rate cuts.
- The MPC cited heightened uncertainty and near-term inflation risks as reasons to wait until August for further action.
- Although the annual consumer price index inflation increased to 2.5% in the first quarter of 2025, it remained within the MPC’s target range of 1 to 3%, noting that the outlook for medium-term inflation pressures has evolved broadly in line with the May MPS projections.
- While it is expected to be near the upper end of the band in the second and third quarters of this year, easing core inflation and spare capacity in the economy should help return it toward the 2% midpoint over time.
- The MPC noted that, despite global factors, domestic financial conditions are evolving broadly as expected, as mortgage and deposit interest rates have continued to decline, reflecting a lower OCR, strong bank liquidity, and soft credit growth.
- In aggregate, GDP growth over the December and March quarters was stronger than expected, reflecting a pick-up in household consumption and business investment, but higher frequency indicators suggest weaker than expected growth in April and May.
- Large economic policy shifts overseas and concerns about sovereign risk could result in additional financial market volatility and increased bond yields, while prolonged economic uncertainty might induce further precautionary behaviour by households and firms, slowing the domestic economic recovery.
- Subject to medium-term inflation pressures continuing to ease in line with the Committee’s central projections, the Committee expects to lower the OCR further, broadly consistent with the projection outlined in May.
- The next meeting is on 20 August 2025.
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY)
Key news events today
No major news event
What can we expect from JPY today?
The Japanese yen entered July 29 on the defensive, pressured by easing safe-haven demand, expectations of no major policy shift from the BoJ this week, and optimism surrounding global trade deals. Markets are now focused on Thursday’s central bank guidance, where any unexpected signals could trigger sharp currency moves. On Monday, the dollar strengthened against both the euro and yen as a trade agreement between the U.S. and the EU provided market certainty and helped avert a potential global trade war.
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
Weak Bearish
The Euro (EUR)
Key news events today
No major news event
What can we expect from EUR today?
The euro is trading with a slightly bearish short-term bias as markets digest the new EU–US trade agreement, upcoming economic data, and signals from global central banks. Key volatility triggers this week include eurozone GDP and inflation figures, as well as the Federal Reserve meeting. Political and trade headlines continue to shape market sentiment, which remains cautious but not panicked.
While steadier than last month, the euro remains sensitive to upcoming GDP and inflation releases. Consensus expectations point to annual eurozone GDP growth of around 1.5% and quarterly growth of 0.6%. The ECB held rates steady last week and continues to adopt a “data-dependent” stance, noting that inflation is stabilizing near 2% while warning of ongoing policy and trade risks.
Central Bank Notes:
- The Governing Council kept the three key ECB interest rates unchanged at its July 24 meeting, maintaining the main refinancing rate at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%, following eight consecutive cuts preceding this decision.
- The decision to hold rates steady was driven by evidence that inflation is stabilizing near the Governing Council’s medium-term target of 2%. Policymakers communicated that further moves on rates would be data-dependent, explicitly refraining from pre-committing to any future path amid persistent global and domestic uncertainties.
- According to the latest Eurosystem staff projections, headline inflation is expected to remain around 2.0% for 2025, with projections indicating 1.6% for 2026 and a rebound to 2.0% in 2027. Downward revisions from previous forecasts primarily reflect lower energy price assumptions and a stronger euro. Inflation excluding energy and food is seen averaging 2.4% in 2025 and 1.9% in 2026–2027, little changed from prior projections.
- Real GDP growth for the Eurozone is forecast at 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. The projections note that a strong first quarter offsets a weaker outlook for the rest of 2025. While business investment and exports are dampened by ongoing trade policy uncertainties—including recent U.S. tariff measures—rising government investment, particularly in defense and infrastructure, is expected to progressively underpin growth.
- Household spending should be supported by firm real income gains and a still-solid labour market. More favorable financing conditions are expected to help strengthen the economy’s resilience to further global shocks. Wage growth, although still elevated, continues to moderate, with profit margins partially absorbing cost pressures.
- Amid significant geopolitical and economic uncertainty, the Governing Council underscored its commitment to ensuring inflation stabilises sustainably at the 2% target. The ECB reiterated it would pursue a meeting-by-meeting, data-dependent approach to its monetary policy stance.
- Future rate decisions will be guided by the assessment of incoming economic and financial data, the outlook for inflation and underlying inflation dynamics, and the effectiveness of monetary policy transmission. The Council continues to stress that it is not pre-committed to any specific rate trajectory.
- The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are continuing to decline in an orderly and predictable way, as the Eurosystem has ceased reinvesting principal payments from maturing securities.
- The next meeting is on 11 September 2025
Next 24 Hours Bias
Medium Bearish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from CHF today?
The Swiss franc is stable to slightly weaker as of July 29, 2025, with traders closely watching for cues from the Swiss National Bank (SNB) on potential interventions while assessing ongoing deflationary pressures, subdued inflation forecasts, and strong safe-haven fundamentals. Unless significant risk-off flows or unexpected policy moves emerge, the CHF is expected to remain rangebound near current levels, largely tracking global risk sentiment and SNB guidance.
The SNB cut its key policy rate to 0% in mid-June 2025 in response to persistent deflationary pressures. Inflation in Switzerland remains slightly negative at -0.1% year-on-year as of May and is projected to average just 0.2% for 2025. The central bank has reiterated its readiness to adjust monetary policy further if inflation weakens again or if the franc experiences substantial appreciation.
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 Bearish
The Pound (GBP)
Key news events today
No major news event
What can we expect from GBP today?
The pound remains under pressure as July draws to a close, driven by softer-than-expected economic data, global trade realignments, and anticipation of key central bank decisions. GBP/USD is trading near recent lows, while GBP/EUR remains volatile but off its extremes.
The near-term outlook for sterling will largely depend on upcoming Fed and BoE policy decisions, as well as potential surprises in incoming economic data. Investor sentiment toward sterling is mixed, with room for a rebound against the euro if UK-eurozone rate differentials persist. However, downside risks remain if the Bank of England moves to cut rates faster than the ECB, which could further weigh on GBP.
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
Weak Bearish
The Canadian Dollar (CAD)
Key news events today
No major news event
What can we expect from CAD today?
The Canadian dollar opened the week on a softer note, pressured by risk-off sentiment, range-bound oil prices, and investor caution ahead of a major week for economic data and policy announcements. Expect potential volatility around Canada’s GDP report (July 31) and Wednesday’s Bank of Canada decision, with the short-term bias remaining weak unless new positive catalysts emerge. The Bank of Canada is widely expected to hold its policy rate steady at 2.75% at its next announcement on July 30, 2025, citing persistent core inflation and robust, if somewhat uneven, labor market data.
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
Medium Bearish
Oil
Key news events today
API Crude Oil Stock (8:30 pm GMT)
What can we expect from Oil today?
Oil prices rebounded sharply heading into July 29, supported by major U.S.–EU trade agreements and renewed geopolitical tensions surrounding Russia and Ukraine. With OPEC+ expected to discuss potential output increases and the IEA slightly revising demand forecasts lower, the market remains highly sensitive to headline risk. Continued volatility is likely this week as the balance between supply expansions and demand uncertainties shapes price direction.
Next 24 Hours Bias
Weak Bullish
