IC Markets – Asia Fundamental Forecast | 15 July 2026

IC Markets – Asia Fundamental Forecast | 15 July 2026

What happened in the U.S. session?

A softer-than-expected U.S. June inflation report, the start of the second-quarter earnings season, and Federal Reserve Chair Kevin Warsh’s first congressional testimony. The cooler inflation data reduced immediate expectations of a July Fed rate hike, weighing on the U.S. dollar and Treasury yields while boosting risk appetite across equities and precious metals. However, Warsh maintained that the Federal Reserve has “no tolerance” for elevated inflation and stressed that policymakers would remain data-dependent, limiting expectations for an aggressive easing cycle.

What does it mean for the Asia Session?

The key focus will be the U.S. June Producer Price Index (PPI) and Core PPI, which will provide fresh insight into upstream inflation after the previous day’s CPI report. Stronger-than-expected producer inflation would reinforce expectations that the Federal Reserve could maintain a hawkish stance, supporting the U.S. dollar while weighing on equities and gold. Markets will also closely monitor Federal Reserve Chairman Kevin Warsh’s congressional testimony for any new guidance on inflation, interest rates, and the outlook for the July FOMC meeting.
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The Dollar Index (DXY)

Key news events today

Core PPI m/m (12:30 pm GMT)

PPI m/m (12:30 pm GMT)

Fed Chairman Warsh Testifies (2:00 pm GMT)

What can we expect from DXY today?

The U.S. dollar enters Wednesday’s session under pressure after June CPI came in softer than expected, reducing expectations of an immediate Federal Reserve rate hike and weighing on Treasury yields. However, attention has now shifted to today’s June Producer Price Index (PPI) report, where markets expect Core PPI to rise 0.3% m/m while headline PPI is forecast to remain flat. Investors will also closely monitor Federal Reserve Chair Kevin Warsh’s second day of congressional testimony for any clues on the Fed’s policy outlook after he reiterated that the central bank remains committed to restoring price stability but cautioned against placing too much weight on a single inflation report.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) left the federal funds rate unchanged at 3.50%–3.75% at its June 16–17, 2026, meeting, marking another pause in the policy cycle. Under new Fed Chair Kevin Warsh, policymakers signaled a more cautious and hawkish stance as inflation remains above target despite moderating energy prices.
• The Committee remains committed to achieving maximum employment and returning inflation to its 2% objective. Labor market conditions have remained relatively stable, with job gains continuing at a moderate pace and the unemployment rate projected to remain near 4.4% through 2026.
• Inflation continues to be the primary concern for policymakers. Headline inflation remains elevated, supported by earlier energy-related price pressures and persistent services inflation. The June projections showed higher inflation forecasts than previously expected, leading several officials to favor keeping policy restrictive for longer.
• Economic activity continues to expand at a moderate pace. Productivity growth, capital investment, and AI-related spending remain supportive of growth, while consumer spending and housing activity show signs of slowing compared with late 2025 and early 2026.
• The June 2026 Summary of Economic Projections (SEP) revealed a more divided Committee. Nine officials projected at least one rate hike during 2026, while others expected rates to remain unchanged or eventually decline. The median outlook shifted toward a higher-for-longer policy path compared with earlier projections.
• The Committee emphasized a data-dependent approach and noted that future decisions will depend on incoming inflation, employment, and economic growth data. Officials acknowledged that geopolitical developments and energy markets remain important upside risks to inflation.
• The FOMC continues its balance sheet normalization program, maintaining Treasury runoff caps at $5 billion per month and agency mortgage-backed securities (MBS) runoff caps at $35 billion per month, while ensuring ample reserves remain in the banking system.
• The next meeting is scheduled for 28 to 29 July 2026.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

Core PPI m/m (12:30 pm GMT)

PPI m/m (12:30 pm GMT)

Fed Chairman Warsh Testifies (2:00 pm GMT)

What can we expect from Gold today?

Gold prices are expected to remain highly sensitive as traders shift their focus to several high-impact U.S. economic events shown on today’s calendar, including Core Producer Price Index (Core PPI), PPI, and Federal Reserve Chair Kevin Warsh’s congressional testimony, followed by the Bank of Canada’s interest rate decision. Gold staged a strong rebound after softer-than-expected U.S. CPI data weakened the U.S. dollar and reduced expectations of an immediate Fed rate hike, allowing the metal to recover from recent losses.

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?

The Australian dollar traded with a cautiously positive tone, supported by the Reserve Bank of Australia’s relatively hawkish stance and improving sentiment toward China, Australia’s largest trading partner. Recent comments from RBA officials reinforced that the central bank remains committed to returning inflation to target, reducing expectations of near-term rate cuts and providing underlying support for the AUD. Investors are also closely watching China’s second-quarter GDP and June activity data, as stronger Chinese economic performance would likely boost demand for Australian exports and strengthen the Australian dollar.

Central Bank Notes:

• The Reserve Bank of New Zealand’s Monetary Policy Committee (MPC) raised the Official Cash Rate (OCR) by 25 basis points to 2.50% at its 8 July 2026 Monetary Policy Review, marking the first rate increase of the current tightening cycle. Unlike the split decision in May, the Committee reached a consensus that reducing monetary stimulus was appropriate to return inflation to target.
• Although global oil prices have fallen following the partial reopening of the Strait of Hormuz, the RBNZ warned that inflation remains above its 1–3% target range and that lingering energy-related cost pressures continue to pose upside risks. The Bank reiterated that further OCR increases are likely, although the timing will remain dependent on incoming economic data.
• The RBNZ now expects headline inflation to have peaked at 3.9% in Q2 2026, lower than the 4.3% peak projected in May, reflecting weaker oil prices. Inflation is forecast to ease to around 3.3% in Q3 2026 before gradually returning to the 2% midpoint by mid-2027, while underlying domestic inflation remains persistent.
• The Committee judged that the current OCR remains accommodative, even after the July increase, and stated that additional tightening will probably be required over coming meetings. Policymakers emphasized that future decisions will depend on inflation expectations, firms’ pricing behaviour, labour market conditions, and the pace of economic recovery rather than following a predetermined path.
• Economic activity slowed during the June quarter as higher energy costs temporarily weighed on demand, but the RBNZ expects the recovery to resume in the September quarter. The Bank’s Kiwi-GDP nowcasting model projects 0.6% quarterly GDP growth in Q3 2026, supported by improving business confidence, lower fuel prices, and stronger household purchasing power as inflation moderates.
• External conditions remained mixed, with elevated global energy price volatility and geopolitical risks supporting upside inflation risks, while softer demand from key trading partners—especially China—continued to weigh on Australian export momentum.
• Financial markets now broadly expect the RBA to hold rates at 4.35% through the third quarter, with the probability of further tightening slightly reduced but still present if services inflation or wage data re-accelerate.
• The July statement emphasized a continued “data-dependent and patient” approach, signaling that policy will remain restrictive for longer if inflation proves persistent, while avoiding any commitment to near-term easing despite slower growth signals.
• The next meeting is on 4 to 5 August 2026.

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 New Zealand dollar (NZD) remains supported by the Reserve Bank of New Zealand’s hawkish shift following last week’s 25-basis-point increase in the Official Cash Rate to 2.50%, the first rate hike in more than three years. Policymakers indicated that additional tightening could be required if inflation remains persistent, helping to underpin demand for the Kiwi despite ongoing global uncertainty. Governor Anna Breman has emphasized that while domestic demand is still soft, businesses are becoming more willing to pass higher costs on to consumers, reinforcing the RBNZ’s focus on keeping inflation expectations anchored.

Central Bank Notes:

• The Reserve Bank of New Zealand’s Monetary Policy Committee (MPC) raised the Official Cash Rate (OCR) by 25 basis points to 2.50% at its 8 July 2026 Monetary Policy Review, marking the first rate increase of the current tightening cycle. Unlike the split decision in May, the Committee reached a consensus that reducing monetary stimulus was appropriate to return inflation to target.
• Although global oil prices have fallen following the partial reopening of the Strait of Hormuz, the RBNZ warned that inflation remains above its 1–3% target range and that lingering energy-related cost pressures continue to pose upside risks. The Bank reiterated that further OCR increases are likely, although the timing will remain dependent on incoming economic data.
• The RBNZ now expects headline inflation to have peaked at 3.9% in Q2 2026, lower than the 4.3% peak projected in May, reflecting weaker oil prices. Inflation is forecast to ease to around 3.3% in Q3 2026 before gradually returning to the 2% midpoint by mid-2027, while underlying domestic inflation remains persistent.
• The Committee judged that the current OCR remains accommodative, even after the July increase, and stated that additional tightening will probably be required over coming meetings. Policymakers emphasized that future decisions will depend on inflation expectations, firms’ pricing behaviour, labour market conditions, and the pace of economic recovery rather than following a predetermined path.
• Economic activity slowed during the June quarter as higher energy costs temporarily weighed on demand, but the RBNZ expects the recovery to resume in the September quarter. The Bank’s Kiwi-GDP nowcasting model projects 0.6% quarterly GDP growth in Q3 2026, supported by improving business confidence, lower fuel prices, and stronger household purchasing power as inflation moderates.
• Domestic demand remains uneven, with tourism, agriculture, and export industries continuing to outperform, while discretionary retail spending, construction, and housing activity remain subdued. The RBNZ believes spare capacity in the economy should limit widespread pass-through of higher business costs into consumer prices, although this remains an important upside inflation risk.
• Financial conditions have eased since the May meeting as wholesale interest rates declined, and the New Zealand dollar depreciated, helping exporters but potentially adding to imported inflation. The Committee noted that shorter-term mortgage rates had increased earlier in the year, while longer-term borrowing costs have begun to stabilize alongside lower market interest-rate expectations.
• The MPC concluded that maintaining price stability remains its primary objective, stressing that while further rate increases are expected, policy will remain data-dependent. The Committee believes returning inflation to the 2% midpoint is essential to achieving a sustainable recovery in employment, household incomes, and long-term economic growth.
• The next meeting is on 2 September 2026.

Next 24 Hours Bias

Medium Bullish

The Japanese Yen (JPY)

Key news events today

No major news event

What can we expect from JPY today?

The Japanese yen remained under pressure, although it recovered modestly after softer-than-expected U.S. inflation data weakened the U.S. dollar. Markets continue to focus on the widening policy divergence between the Federal Reserve and the Bank of Japan, with the yen trading near multi-decade lows against the dollar despite the BOJ’s recent policy tightening. Investors are increasingly alert to the possibility of Japanese government intervention if USD/JPY climbs further, while reports that Japanese officials are considering adjustments to the Government Pension Investment Fund’s asset allocation and measures to encourage greater domestic investment have provided some support for the currency.

Central Bank Notes:

• The Policy Board of the Bank of Japan maintained the short-term policy rate at 0.75% at the 15–16 June 2026 meeting, in line with market expectations, while reiterating a cautious and data-dependent approach to further policy normalization amid mixed domestic and external conditions.
• The BOJ continues to target the uncollateralized overnight call rate around 0.75%, with policymakers signaling that any move toward 1.0% will depend on sustained wage growth, inflation durability above target, stable financial conditions, and limited downside risks to growth rather than a fixed tightening schedule.
• JGB purchase tapering remains on track, with monthly bond buying continuing to moderate under the previously announced framework. The BOJ maintains flexibility to intervene or temporarily adjust purchase operations if sharp volatility emerges in the Japanese government bond market or if excessive yen fluctuations threaten financial stability.
• Japan’s economy shows moderate but uneven growth heading into mid-2026, supported by resilient domestic demand, corporate investment, and recovering external activity, although weaker global manufacturing momentum and geopolitical tensions continue to weigh on the export outlook.
• Core CPI (excluding fresh food) remains near the mid-1% y/y range, while underlying inflation indicators, including core-core measures and services inflation, continue to hover around or above 2%, supported by stronger wage dynamics and pass-through effects from prior cost increases.
• Domestic inflation pressures remain supported by 2026 Shunto wage settlements near 5%, labor shortages, and firm services pricing. However, easing import costs and stabilizing commodity prices are helping moderate headline inflation, while risks persist from renewed energy volatility and yen depreciation.
• Near-term real GDP growth may remain below trend, reflecting the lagged impact of tighter financial conditions and external uncertainty, but rising household incomes, accommodative real rates, and fiscal support measures are expected to gradually support consumption and business investment.
• Over the medium term, the BOJ continues to expect that labor-market tightness, wage growth, and structural productivity improvements will help sustain inflation around the 2% target, leaving room for a gradual move toward 1.0% policy rates into late-2026 or 2027, provided inflation and economic momentum remain aligned.
• The next meeting is on 30 to 31 July 2026.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

Oil prices remain strongly supported heading into the Asian session, as markets continue to price in heightened geopolitical risk following renewed U.S.-Iran tensions. Crude rallied to a one-month high after the United States reinstated restrictions on Iranian shipping and concerns resurfaced over potential disruptions through the Strait of Hormuz, a vital route for roughly one-fifth of global oil trade. Although the waterway remains open to most commercial traffic, the risk premium has increased significantly, while traders are also awaiting the latest U.S. crude inventory data for confirmation of tightening supplies.

Next 24 Hours Bias
Weak Bearish