IC Markets – Asia Fundamental Forecast | 06 August 2026

IC Markets – Asia Fundamental Forecast | 06 August 2026

What happened in the U.S. session?

A tug-of-war between signs of a cooling labor market and continued economic resilience. A weaker ADP employment report initially supported risk assets and tempered expectations for aggressive Fed tightening, but the stronger-than-expected ISM Services PMI reminded investors that inflationary pressures remain elevated. As a result, the U.S. dollar and Treasury yields stayed relatively firm, gold experienced two-way volatility, equities held modest gains, and oil prices eased slightly amid improving geopolitical sentiment. With U.S. Initial Jobless Claims due next and the Non-Farm Payrolls report approaching, markets remain highly sensitive to incoming labor-market data.

What does it mean for the Asia Session?

Asian traders are expected to begin Thursday’s session with a risk-positive tone after strong U.S. services data reinforced the resilience of the world’s largest economy. However, the stronger economic data also revived expectations that the Federal Reserve may keep interest rates higher for longer, supporting the U.S. dollar while weighing on precious metals such as gold. Investors will also continue monitoring developments surrounding U.S. trade policy, currency market intervention involving the Japanese yen, and easing geopolitical tensions in the Middle East, which have contributed to lower crude oil prices and improved global risk sentiment.
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The Dollar Index (DXY)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

The U.S. Dollar is trading cautiously as investors await today’s Initial Unemployment Claims data, one of the final key labor market indicators before Friday’s highly anticipated Non-Farm Payrolls (NFP) report. Recent economic releases suggest the U.S. labor market remains relatively resilient despite signs of gradual cooling, keeping expectations for future Federal Reserve policy finely balanced. A lower-than-expected claims figure would reinforce confidence in the strength of the labor market, likely supporting the dollar and U.S. Treasury yields as traders reduce expectations for near-term monetary easing.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) kept the federal funds rate unchanged at 3.50%–3.75% at its July 28–29, 2026, meeting, marking the fifth consecutive meeting without a policy change. The Committee voted 9–3 to maintain rates, with three members dissenting in favor of a 25-basis-point rate hike, highlighting growing concern among some policymakers that inflation remains too high.
• The Committee reaffirmed its dual mandate of maximum employment and price stability. Officials noted that the labor market remains resilient, with job gains broadly keeping pace with labor force growth and the unemployment rate remaining relatively stable. The FOMC continues to view employment conditions as consistent with a healthy economy while remaining vigilant for signs of labor market weakening.
• Inflation remains the Committee’s primary concern. While some recent inflation data have shown moderation, overall price pressures remain above the Fed’s 2% target. Policymakers emphasized that elevated inflation continues to be driven in part by higher energy prices and persistent supply-side pressures, leading the Committee to maintain a restrictive monetary policy stance.
• Economic activity continues to expand at a solid pace despite elevated uncertainty. Strong productivity growth, business investment, and continued spending related to artificial intelligence remain supportive of economic growth. However, the FOMC acknowledged that geopolitical tensions, particularly developments affecting global energy markets, continue to pose risks to both inflation and the broader economic outlook.
• The July meeting highlighted increasing divisions within the Committee. Three policymakers—Beth Hammack, Neel Kashkari, and Lorie Logan—voted against the majority, preferring an immediate rate increase. This unusually large number of dissents reflects growing concern among some officials that inflation could remain persistent and may require additional policy tightening if progress stalls.
• Chair Kevin Warsh reiterated that future policy decisions will remain strictly data-dependent. He avoided providing explicit forward guidance, emphasizing that upcoming decisions will depend on incoming inflation, employment, and growth data. Warsh also stressed that the Committee remains fully committed to returning inflation to its 2% objective and is prepared to act if inflationary pressures intensify.
• The FOMC continues its balance sheet normalization program without changes. The Federal Reserve will maintain Treasury runoff caps at $5 billion per month and agency mortgage-backed securities (MBS) runoff caps at $35 billion per month, while continuing to ensure ample reserves remain available within the banking system.
• The next meeting is scheduled for 15 to 16 September 2026.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

Gold surged to its highest level in nearly seven weeks after investors rushed into safe-haven assets amid a weaker U.S. dollar and falling U.S. Treasury yields. Market sentiment also improved as diplomatic progress between the United States and Iran raised expectations that inflation pressures from energy markets could ease, reducing pressure on the Federal Reserve to keep interest rates elevated. Investors are now turning their attention to today’s U.S. Initial Jobless Claims report (forecast: 203K, previous: 197K). A higher-than-expected reading could further weaken the U.S. dollar and support gold, while a stronger labor market could limit the metal’s upside.

Next 24 Hours Bias
Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news event

What can we expect from AUD today?

The Australian dollar is trading with a cautious tone today as markets continue to focus on the Reserve Bank of Australia’s (RBA) interest-rate outlook, inflation pressures, and global risk sentiment. The RBA remains in a restrictive policy position, with the cash rate currently at 4.35%, while traders are closely watching whether inflation trends will justify another rate adjustment at the upcoming policy meeting. Recent Australian inflation data showed some easing, with annual CPI moderating, but underlying price pressures remain a key concern for policymakers.

Central Bank Notes:

• The Reserve Bank of Australia (RBA) maintained the Cash Rate Target at 4.35% during its August 2026 Monetary Policy Meeting, continuing its cautious approach after three rate increases earlier in the year. Policymakers judged that the current restrictive policy setting was appropriate while assessing the full impact of previous tightening on inflation, household demand, and economic activity.
• Inflation remained the primary focus for the Board, with recent data showing signs of moderation as energy prices eased following the partial reopening of the Strait of Hormuz. However, the RBA emphasized that underlying inflation pressures, particularly in services, wages, and domestic cost growth, remain above levels consistent with the 2–3% inflation target. The Bank maintained that policy must remain restrictive until there is stronger evidence that inflation is sustainably moving lower.
• The RBA acknowledged that headline inflation has improved from earlier peaks due to lower fuel costs and easing global supply pressures. However, policymakers noted that inflation risks remain tilted to the upside due to geopolitical uncertainty, potential energy market disruptions, and the possibility that businesses may continue passing higher costs through to consumers.
• Economic growth showed signs of slowing during mid-2026 as higher interest rates continued to weigh on household consumption and borrowing activity. Nevertheless, the RBA expects economic momentum to gradually improve in the second half of the year, supported by easing inflation, improving real household income, and stronger business confidence.
• The labour market remained relatively resilient, but policymakers highlighted that employment growth has moderated compared with earlier in the year. The Board continued monitoring wage growth, unemployment trends, and labour market slack, noting that a sharper deterioration in employment conditions could influence future policy decisions.
• External conditions remained uncertain, with global energy market volatility, weaker Chinese demand, and geopolitical tensions creating a mixed outlook for Australia’s growth and inflation environment. Softer commodity demand from China continued to weigh on Australia’s export outlook, while commodity price fluctuations remained a key risk factor.
• Financial markets continued to price the RBA as being near the end of its tightening cycle, with investors increasingly expecting rates to remain unchanged through the third quarter of 2026. However, markets maintained some probability of another rate increase if inflation proves more persistent than expected, particularly through services inflation and wage pressures.
• The August statement reinforced the RBA’s “data-dependent and patient” approach, with policymakers avoiding any commitment toward rate cuts while maintaining flexibility to respond to incoming inflation, employment, and economic growth data. The Board emphasized that future decisions will depend on inflation expectations, household spending behaviour, business pricing decisions, and global economic developments.
• The next meeting is on 10 to 11 August 2026.

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news event

What can we expect from NZD today?

The New Zealand dollar is trading with mixed sentiment today as markets continue to digest a weaker domestic labour market picture while monitoring the Reserve Bank of New Zealand’s (RBNZ) inflation and interest-rate outlook. New Zealand’s unemployment rate climbed to 5.6% in Q2 2026, its highest level since 2015, showing further deterioration in employment conditions. Although employment increased slightly, stronger labour-force participation pushed unemployment higher, raising concerns about economic momentum and household spending. 

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

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news event

What can we expect from JPY today?

The Japanese yen remains in focus after a major intervention effort by Japanese authorities, supported by the United States, to slow the yen’s sharp depreciation. The yen strengthened toward the 157.50 area against the U.S. dollar after previously falling to its weakest level in decades. The move came as Japan and the U.S. coordinated currency-market actions, while easing geopolitical tensions and lower oil prices reduced demand for the U.S. dollar as a safe-haven asset.

Central Bank Notes:

• The Bank of Japan (BOJ) maintained the short-term policy rate at 1.00% at its 30–31 July 2026 Monetary Policy Meeting. The decision reflected confidence that Japan’s economy continues to recover moderately, while policymakers judged that further tightening should proceed gradually as they assess incoming data and the sustainability of inflation.
• The BOJ continues to guide the uncollateralized overnight call rate at around 1.00%, emphasizing that future policy adjustments will remain data-dependent. The Bank reiterated that any additional rate increases will depend on sustained wage growth, inflation remaining durably around or above the 2% target, stable financial markets, and resilient domestic demand rather than following a predetermined path.
• The Bank will continue reducing its purchases of Japanese Government Bonds (JGBs) in line with its previously announced tapering plan while maintaining flexibility to conduct market operations if excessive volatility threatens financial stability. Policymakers also remain attentive to sharp movements in the yen and their potential impact on inflation and financial conditions.
• Japan’s economy continues to expand at a moderate pace, supported by firm domestic consumption, strong corporate investment, improving labor market conditions, and recovering global demand. However, uncertainty surrounding global trade, geopolitical developments, and external manufacturing activity continues to pose downside risks to the growth outlook.
• Underlying inflation continues to strengthen. While headline inflation has moderated somewhat due to easing energy prices, core inflation remains above the BOJ’s 2% objective, supported by broad-based services inflation, rising labor costs, and stronger pricing behavior among firms. The BOJ now sees upside risks to medium-term inflation from persistent wage growth and structural price-setting changes.
• Domestic inflationary pressures remain supported by robust wage settlements, persistent labor shortages, and continued pass-through of higher labor costs into services prices. At the same time, policymakers are closely monitoring the effects of yen depreciation, which could accelerate imported inflation if sustained, even as lower commodity and energy prices provide some offset.
• The BOJ expects real GDP growth to remain moderate over the near term as accommodative financial conditions, rising household incomes, and business investment continue to support activity. Nevertheless, policymakers acknowledge that tighter global financial conditions, weaker external demand, and geopolitical uncertainty could temporarily restrain growth.
• Looking ahead, the BOJ maintains that if inflation continues to stabilize around its 2% objective alongside sustained wage gains and economic expansion, further gradual policy normalization remains appropriate. Financial markets generally expect another 25-basis-point rate increase later in 2026, although the timing will depend on incoming economic and inflation data.
• The next meeting is on 17 to 18 September 2026.

Next 24 Hours Bias

MediumBearish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Crude oil markets remain highly sensitive to geopolitical developments, supply expectations, and inventory data heading into Thursday’s session. Oil prices have been stabilising after a sharp decline earlier in the week as investors weigh the possibility of improved oil flows through the Strait of Hormuz following renewed diplomatic efforts between the U.S. and Iran. Brent crude recently traded around the $79–$80 per barrel region, while WTI remained near the mid-$75 range, with market participants cautious about whether tensions will continue easing or flare up again.

Next 24 Hours Bias
Medium Bullish