IC Markets – Europe Fundamental Forecast | 20 November 2025
What happened in the Asia session?
Today’s Asia session was marked by caution as investors weighed Nvidia’s earnings, watched shifts in inflation and policy across the region, and braced for delayed U.S. macro data releases. The most notable market moves were in Asian technology equities, the Japanese yen’s continued weakness, and stabilization in gold amid broad-based uncertainty. Rising Japanese bond yields and modest moves in crude further highlighted lingering risk aversion tied to fiscal and global macro pressures.
What does it mean for the Europe & US sessions?
Today’s trading sessions in Europe and the US face significant catalysts from delayed US economic data releases, particularly the critical September jobs report. Market sentiment improved following Nvidia’s strong earnings that allayed AI bubble fears, though broader concerns remain about economic momentum given mixed signals from manufacturing data, weakening oil demand, and cautious consumer behavior across major economies.
The Dollar Index (DXY)
Key news events today
Non-Farm Employment Change (1:30 pm GMT)
Unemployment Rate (1:30 pm GMT)
Philly Fed Manufacturing Index (1:30 pm GMT)
Unemployment Claims (Tentative)
Existing Home Sales (3:00 pm GMT)
What can we expect from DXY today?
The US dollar strengthened significantly amid growing uncertainty about Federal Reserve rate cuts, with the delayed September jobs report adding to market volatility. Fed minutes revealed deep divisions among policymakers about December policy, cooling expectations for further easing, and providing support for the greenback. The dollar’s rally pressured major currencies, particularly the euro and sterling, while weighing on gold and risk assets.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) voted, by majority, to lower the federal funds rate target range by 25 basis points to 3.75% — 4.00% at its October 28–29, 2025, meeting, marking the second consecutive cut following the 25 basis points reduction in September.
- The Committee maintained its long-term objectives of maximum employment and 2% inflation, noting that the labor market continues to soften, with modest job creation and an unemployment rate edging higher. In comparison, inflation remains above target at around 3.0%.
- Policymakers highlighted ongoing downside risks to economic growth, tempered by signs of resilient economic activity. September’s consumer price index (CPI) came in slightly lower than expected at 3.0% year-over-year, easing inflation pressure but still warranting vigilance given tariff-driven price effects.
- Economic activity expanded modestly in the third quarter, with GDP growth estimates around 1.0% annualized; however, uncertainty remains elevated amid persistent global trade tensions and the U.S. government shutdown, which is impacting data availability.
- The updated Summary of Economic Projections anticipates an unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections remaining near 3.0%, indicating a slow easing path ahead.
- The Committee emphasized its flexible, data-dependent approach and underscored that future policy adjustments will be guided by incoming labor market and inflation data. As in prior meetings, there was dissent, including one member advocating a more aggressive 50-basis-point cut.
- The FOMC announced the planned conclusion of its balance sheet reduction (quantitative tightening) program, intending to cease runoff in the near term to maintain market stability. Treasury redemption caps will remain steady at $5 billion per month, and agency mortgage-backed securities caps will remain at $35 billion.
- The next meeting is scheduled for 9 to 10 December 2025.
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
Non-Farm Employment Change (1:30 pm GMT)
Unemployment Rate (1:30 pm GMT)
Philly Fed Manufacturing Index (1:30 pm GMT)
Unemployment Claims (Tentative)
Existing Home Sales (3:00 pm GMT)
What can we expect from Gold today?
Gold faces a critical juncture on Thursday, November 20, 2025, as markets await the delayed September US jobs report that could significantly influence Federal Reserve policy expectations and gold’s near-term direction. The precious metal is caught between competing forces: a strengthening dollar and higher real yields creating downward pressure versus persistent safe-haven demand from geopolitical tensions, equity market weakness, and structural central bank buying providing support.
Next 24 Hours Bias
Weak Bullish
The Euro (EUR)
Key news events today
No major news event
What can we expect from EUR today?
The Euro faces a challenging environment, with technical weakness, US Dollar strength, and cautious market positioning ahead of key US employment data dominating the narrative. While the ECB maintains that inflation has returned to target and the eurozone economy shows resilience, persistent risks from trade tensions, geopolitical uncertainty, and Germany’s ambitious fiscal expansion continue to weigh on sentiment.
Central Bank Notes:
- The Governing Council of the ECB kept the three key interest rates unchanged at its 30 October 2025 meeting. The main refinancing rate remains at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. This decision reflects policymakers’ assessment that the current monetary stance remains consistent with medium-term price stability, while incoming data confirm a gradual return of inflation towards the target.
- Recent indicators point to stable price dynamics. Headline inflation remains near the 2% mark, with energy prices contained and food inflation easing slightly after earlier supply bottlenecks. Wage growth continues to moderate, contributing to the slowdown in domestic cost pressures. The ECB reiterated its commitment to a data-driven, meeting-by-meeting approach and emphasized flexibility amid uncertain global financial conditions.
- Eurosystem staff projections have not been materially altered since September. Headline inflation averages remain at 2.0% for 2025, 1.8% for 2026, and 2.0% for 2027. Recent softening in producer prices and subdued pipeline pressures suggest limited upside risks to inflation, though geopolitical tensions and potential commodity shocks continue to pose uncertainties to the outlook.
- Euro area GDP growth remains on track with earlier forecasts, projected at 1.1% for 2025, 1.1% for 2026, and 1.4% for 2027. Forward-looking indicators, including PMIs and industrial sentiment surveys, signal some stabilization in activity following weakness in the third quarter. Public investment and recovering export activity are expected to offset softer private sector demand in the near term.
- The labor market remains resilient, with unemployment rates at multi-decade lows and participation rates strong. Real income growth continues to support household spending, even as consumption growth normalizes from earlier highs. Financing conditions remain favorable, aided by stable banking sector liquidity and improved credit demand among small and medium-sized firms.
- Business sentiment remains mixed, reflecting lingering uncertainty over global trade policy and the path of US tariffs. However, easing supply chain costs and improved export competitiveness due to softer exchange rates are providing some relief to manufacturing and external-oriented sectors.
- The Governing Council reaffirmed that future decisions will depend on an integrated assessment of incoming data—covering inflation trends, financial conditions, and the state of policy transmission. The Council emphasized that no pre-set path for rates exists; keeping all options open should the economic outlook shift markedly.
- Balance sheet reduction continues smoothly, with holdings under the APP and PEPP declining as reinvestments have ceased. The ECB confirmed that the pace of portfolio runoff remains in line with its previously communicated normalization plan, supporting a gradual withdrawal of monetary accommodation in a predictable manner.
- The next meeting is on 17 to 18 December 2025
Next 24 Hours Bias
Weak Bearish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from CHF today?
The Swiss franc faces mixed pressures as of November 20, 2025. While Switzerland’s Q3 economic contraction of 0.5%—the first since 2023—and the resolution of the U.S. tariff dispute (reduced from 39% to 15%) have created headwinds for the currency, safe-haven demand continues to support the franc at elevated levels near multi-year highs. USD/CHF has recovered above 0.80 as the dollar strengthens on reduced Fed rate cut expectations, with the pair testing resistance at 0.8030.
Central Bank Notes:
- The SNB maintained its key policy rate at 0% during its meeting on 25 September 2025, pausing a sequence of six consecutive rate cuts as inflation stabilized and the Swiss franc remained firm.
- Recent data showed a modest rebound in inflation, with Swiss consumer prices rising 0.2% year-on-year in August after staying above zero for three consecutive months; this helped alleviate fears of deflation that were mounting earlier in the year.
- The conditional inflation forecast remains broadly unchanged from June: headline inflation is expected to average 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027. The risk of a negative rate move has diminished for now, but the SNB retains flexibility should inflationary pressures weaken again.
- The global economic outlook has deteriorated further, weighed down by heightened trade tensions—especially with the U.S.—and ongoing uncertainty in key Swiss export markets.
- Swiss GDP growth moderated in Q2 after a strong Q1 boosted by front-loaded U.S. exports. The SNB expects growth to slow and remain subdued, with forecasted GDP expansion between 1% and 1.5% in both 2025 and 2026.
- Labor market sentiment in the Swiss industrial sector has softened on concerns over export competitiveness and potential adjustments to production, but the overall growth outlook stays broadly unchanged
- The SNB reiterated its readiness to respond as needed if deflation risks re-emerge, emphasizing its commitment to medium-term price stability and a robust, transparent communication policy, with the introduction of more detailed monetary policy minutes beginning in October.
- The next meeting is on 11 December 2025.
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
No major news event
What can we expect from GBP today?
The British pound faced a challenging session as stronger-than-expected UK inflation data (2.3% vs. 2.2% forecast) initially supported sterling but failed to deliver sustained gains. GBP/USD traded around 1.2650-1.2680, unable to break above 1.2700 resistance, while technical indicators point to further downside risks. The hotter inflation print, particularly the 3.3% core CPI reading, reinforces the Bank of England’s cautious approach to rate cuts, with markets now pricing an 82.8% probability of no change in December..
Central Bank Notes:
- The Bank of England’s Monetary Policy Committee (MPC) met on 6 November 2025 and voted by a majority of 7–2 to keep the Bank Rate unchanged at 4.00 percent for a second consecutive meeting. The decision reflects the Committee’s cautious approach as inflation remains above target, but underlying economic momentum continues to weaken. Two members maintained their votes for a 25-basis-point cut, citing further signs of labor-market softening and weak business sentiment.
- The BOE adjusted its guidance on quantitative tightening (QT), maintaining the reduced pace established in September. The planned reduction of UK government bond holdings remains at £67.5 billion over the next 12 months, leaving the current gilt balance near £550 billion. Policymakers described the recalibrated QT path as “appropriate for current market conditions,” emphasizing the importance of liquidity management amid heightened volatility.
- Headline inflation moderated slightly to 3.6 percent in October from 3.8 percent previously, driven by easing food and transport prices. However, core inflation has shown only gradual progress, holding near 3.9 percent. The MPC noted that services inflation and administered energy costs continue to exert pressure, highlighting the challenge of achieving the 2 percent target sustainably. The Committee’s latest projections see inflation falling toward 3 percent by mid-2026, with further downside expected if energy and wage dynamics continue to normalize.
- Economic activity remains subdued. Estimates place Q3 GDP growth close to zero, with both business output and consumer spending restrained. The unemployment rate has edged up to 4.8 percent, while pay growth cooled to just under 5 percent year-on-year. MPC members acknowledged that pay settlements are weakening further, signaling an easing in labor cost pressures as demand softens. Surveys from the manufacturing and services sectors suggest muted hiring intentions through year-end.
- International factors continue to complicate the policy outlook. Fluctuating oil prices—partly linked to renewed Middle East tensions—alongside fragile global demand have contributed to higher market volatility. The MPC reiterated that external shocks, including global food and energy disruptions, could temporarily slow the disinflation path but remain unlikely to derail the medium-term moderation in prices.
- The Committee assessed risks around inflation as balanced. Downside risks arise from sluggish domestic growth and declining real income momentum, while upside risks remain tied to elevated inflation expectations and stubborn services inflation. Policymakers emphasized the need for patience, maintaining that any rate cuts ahead of clear inflation progress could undermine confidence in policy credibility.
- The MPC’s overall stance remains restrictive but increasingly balanced, with future moves expected to follow a cautious, data-driven trajectory. The Committee reaffirmed that monetary policy will stay tight until there is compelling evidence that inflation is returning to the 2 percent target on a durable basis.
- The next meeting is on 18 December 2025.
Next 24 Hours Bias
Medium Bearish
The Canadian Dollar (CAD)
Key news events today
No major news event
What can we expect from CAD today?
The Canadian dollar (loonie) is experiencing notable weakness with USD/CAD trading around the 1.4040-1.4060 range, representing approximately 0.40-0.50% depreciation versus the previous session. On November 19, the pair climbed to 1.4059, marking CAD weakness following the cancellation of key U.S. employment data. The loonie has now depreciated 0.65% over the past 12 months.
Central Bank Notes:
- The Council noted that U.S. tariff tensions have eased slightly following early progress in bilateral discussions, though the external trade environment remains fragile. Businesses continue to hold back on long-term investment, with the Bank highlighting that sustained clarity on U.S. trade policy is needed to restore confidence.
- The Bank acknowledged that uncertainty persists despite the softer U.S. tone, as incoming data show limited improvement in export orders. The manufacturing sector has stabilized but remains below pre-2024 output levels, reflecting weak global demand and cautious corporate spending.
- Canada’s economy showed tentative signs of recovery in early Q4, with GDP estimated to expand by 0.3% in October after two quarters of contraction. Mining and energy activity strengthened modestly, aided by steady crude demand, while goods exports posted a fractional gain.
- Service sector growth remained uneven, supported mainly by tourism-related and technology services. However, retail spending and household consumption were subdued, constrained by slower job creation and lingering consumer caution. The Bank judged overall momentum as fragile but improving marginally.
- Housing activity showed modest reacceleration in major urban markets as mortgage rates stabilized near record lows. Nonetheless, affordability pressures and stricter lending standards continue to cap overall resale volumes, leading to only a gradual recovery in the housing sector.
- Headline CPI inflation rose to 2.1% in October, reaching the Bank’s target for the first time in six months. Higher energy prices and a modest uptick in food and shelter costs drove the increase. Core inflation measures remained stable, suggesting underlying price pressures are contained.
- The Governing Council reiterated its data-dependent stance, indicating that the current policy rate remains appropriate amid tentative growth and balanced inflation risks. Officials noted that while additional stimulus is not ruled out, the emphasis has shifted toward monitoring the sustainability of the recovery rather than immediate rate adjustments.
- The next meeting is on 17 to 18 December 2025.
Next 24 Hours Bias
WeaK Bearish
Oil
Key news events today
No major news event
What can we expect from Oil today?
Thursday marked a critical juncture for oil markets as multiple forces converged. Prices stabilized in the $59-64 range for WTI and Brent, respectively, following earlier declines driven by peace negotiation prospects between Ukraine and Russia. The approaching November 21 sanctions deadline on Rosneft and Lukoil significantly disrupted Russian oil flows, with Asian buyers cutting purchases by up to two-thirds and Russian revenues falling to 2.5-year lows.
Next 24 Hours Bias
Weak Bearish
