IC Markets – Europe Fundamental Forecast | 15 December 2025
What happened in the Asia session?
During today’s Asia session, sentiment was dominated by a combination of global tech weakness and local macro themes: a strong Japanese Tankan survey kept speculation alive that the BOJ may soon hike rates, while traders positioned cautiously ahead of key Chinese November data expected to highlight weak domestic demand despite resilient industrial output. This backdrop, together with lingering fears over an AI‑driven valuation bubble and recent Wall Street tech losses, pushed major Asian equity indices lower, particularly the Kospi, Hang Seng futures, Australian ASX 200, and Japan’s benchmarks, while the yen, yuan, and AUD were the main FX crosses in focus, and Bitcoin extended its slide as risk appetite stayed muted.
What does it mean for the Europe & US sessions?
Today opens a busy macro week: traders should focus on Eurozone industrial production, Swiss SECO forecasts, and Canadian CPI as early tests of growth and inflation momentum, while positioning in EUR, CAD and CHF and in European and US indices will be shaped by how these releases feed into expectations for next steps from the ECB, BoE, BoJ and the Federal Reserve.
The Dollar Index (DXY)
Key news events today
Empire State Manufacturing Index (1:30 pm GMT)
What can we expect from DXY today?
The dollar starts Monday, on the back foot but not in free‑fall, trading just under the 99 DXY level after recent declines as investors wait for US retail sales and PMI releases that will refine expectations for the pace of future Fed easing. Technical breaks below prior support and weekly bearish candles point to a medium‑term softening trend, while macro forecasts and the cumulative effect of three Fed cuts suggest further, though measured, dollar weakness into 2026. Traders are therefore treating intraday bounces as largely corrective within a broader sideways‑to‑lower profile rather than the start of a new bullish phase for the greenback.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) is widely expected to lower the federal funds rate target range by 25 basis points to 3.50%–3.75% at its December 9–10, 2025, meeting, marking the third consecutive cut after the October reduction to 3.75%–4.00%
- The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market showing further softening as the unemployment rate rose to 4.4% in September 2025 amid modest job gains.
- Officials note persistent downside risks to growth alongside resilient activity, with inflation easing to 3.0% year-over-year CPI in September but remaining elevated due to tariff effects; core PCE stands at around 2.8% as of October.
- Economic activity grew at a 3.8% annualized pace in Q2 2025 per revised estimates, though Q3 and Q4 face headwinds from trade tensions, fiscal restraint, and data disruptions like the government shutdown.
- September’s Summary of Economic Projections forecasts 2025 unemployment at a median 4.5%, with PCE inflation near 3.0% and core PCE at 3.1%, signaling a gradual disinflation path; updates expected on December 10 may adjust for higher unemployment and lower growth.
- The Committee maintained its data-dependent approach, noting a softening labor market and inflation above the 2% target, while deciding to lower the federal funds rate target range by 25 basis points to 3.50%-3.75%. Dissent persisted, with multiple members opposing the cut or advocating for a hold, reflecting divisions similar to recent meetings.
- The FOMC confirmed the conclusion of its quantitative tightening program effective December 1, 2025, with Treasury rolloff caps at $5 billion per month and agency MBS caps at $35 billion per month to ensure ample reserves and market stability.
- The next meeting is scheduled for 27 to 28 January 2026.
Next 24 Hours Bias
Medium bearish
Gold (XAU)
Key news events today
Empire State Manufacturing Index (1:30 pm GMT)
What can we expect from Gold today?
Gold starts Monday, trading near the upper end of its recent range around 4,250–4,300 USD/oz, consolidating just below record highs after a powerful year‑long rally driven by Fed rate cuts, lower real yields, and a weaker dollar. Market commentary for the week ahead points to an intact bullish structure with support in the low‑4,100s and potential for renewed upside if dips attract buyers, but also notes overbought conditions, heavy speculative positioning, and the risk of sharp corrections should profit‑taking accelerate or the dollar rebound.
Next 24 Hours Bias
Strong Bullish
The Euro (EUR)
Key news events today
No major news event
What can we expect from EUR today?
The euro starts Monday on a firm footing, with EUR/USD trading around 1.17 near a two‑month high as traders respond to a softer US dollar following the Fed’s recent rate cut and to relatively hawkish messaging from the ECB. Technical structures and current positioning still lean modestly bullish for the euro, but with the pair pressing into a significant resistance band, markets expect choppy, headline‑driven trading as investors reassess interest‑rate paths on both sides of the Atlantic over the coming days.
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, supported 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
Medium Bullish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from CHF today?
The Swiss franc starts Monday on a firm footing, trading near multi‑year highs versus the dollar as markets digest an SNB that has stayed on hold at 0% but sounded marginally more optimistic thanks to lower US tariffs and resilient global demand, while a freshly eased Fed keeps downward pressure on the greenback. Recent data showing zero inflation and a small Q3 contraction mean Swiss policymakers still see risks from an overly strong currency, yet safe‑haven flows and improved trade prospects continue to underpin CHF, leaving it slightly softer on the month but significantly stronger year‑on‑year against major peers
Central Bank Notes:
- At its 11 December 2025 monetary policy assessment, the Swiss National Bank (SNB) is widely expected to leave the policy rate unchanged at 0%, extending the pause that began in September as the Governing Board judges that current settings are sufficient to keep inflation near, but still below, its target while avoiding an unnecessary move into negative rates.
- Recent data show that the tentative rebound in Swiss inflation has stalled, with headline CPI easing from 0.1% year‑on‑year in October to 0.0% in November and core inflation slipping to about 0.4%, reinforcing the view that underlying price pressures remain very weak and that deflation risks, while contained, have not fully disappeared.
- The SNB’s conditional inflation forecast is likely to remain close to the September projections, with inflation still seen averaging roughly 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027 under an unchanged policy rate path, though the latest CPI prints argue for a slightly lower near‑term profile and keep open the option of renewed easing if activity or prices weaken further.
- The global backdrop has deteriorated further, as continuing U.S. tariff actions and softer external demand weigh on world trade, while uncertainty in key European and U.S. markets for Swiss exports persists, leaving the SNB cautious about the growth outlook despite Switzerland’s relatively resilient domestic demand.
- Business and labor‑market sentiment in export‑oriented manufacturing remains subdued, with firms reporting pressure on margins from the still‑strong franc and softer foreign orders, although the broader economy is still expected to grow at around 1–1.5% in 2025 and unemployment only drifting up gradually from low levels.
- The SNB continues to stress its willingness to act if deflation risks re‑emerge, reiterating that it can ease policy through renewed rate cuts or targeted foreign‑exchange intervention if necessary, while also highlighting its commitment to transparent communication, including the publication of detailed minutes from recent assessments and ongoing dialogue with international partners on FX policy
The next meeting is on 19 March 2026.
Next 24 Hours Bias
Medium Bullish
The Pound (GBP)
Key news events today
No major news event
What can we expect from GBP today?
On Monday, the Pound is slightly weaker, with GBP/USD drifting down to the mid‑1.33s as traders trim exposure before crucial UK inflation figures and Thursday’s Bank of England meeting. Recent soft GDP and moderating inflation have increased expectations of a 25 bps BoE rate cut, weighing on Sterling and prompting some “sell‑on‑rally” strategies despite the currency’s still‑solid performance over the past month.
Central Bank Notes:
- The Bank of England’s Monetary Policy Committee (MPC) met on 6 November 2025 and voted 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 Bullish
The Canadian Dollar (CAD)
Key news events today
CPI m/m (1:30 pm GMT)
Median CPI y/y (1:30 pm GMT)
Trimmed CPI y/y (1:30 pm GMT)
Common CPI y/y (1:30 pm GMT)
What can we expect from CAD today?
Going into Monday the Canadian dollar is trading near its strongest levels in roughly three months as USD/CAD hovers around the mid‑1.37s, underpinned by a perception that the Bank of Canada is effectively “done cutting” after holding rates at 2.25% last week and by expectations that today’s CPI, housing, and manufacturing data will show inflation still near target but growth only mildly softer. Markets are positioned for modest further CAD strength if inflation surprises higher or proves sticky.
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 limit overall resale volumes, resulting in 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
Medium Bullish
Oil
Key news events today
No major news event
What can we expect from Oil today?
On Monday, 15 December 2025, oil staged only a mild bounce, with Brent around the low 60s and WTI in the high 50s, after both benchmarks slid more than 4% last week and now trade near two‑month lows. The key narrative is that expectations of a sizable global surplus and high inventories outweigh fresh geopolitical worries, including U.S.–Venezuela tensions, so rallies are being sold and sentiment remains broadly bearish even as traders trim some short positions today.
Next 24 Hours Bias
Medium Bearish
