IC Markets – Europe Fundamental Forecast | 15 September 2026

IC Markets – Europe Fundamental Forecast | 15 September 2026

What happened in the Asia session?

Asian markets traded cautiously on Tuesday as rising oil prices, higher global bond yields, and concerns surrounding AI investment weighed on risk sentiment. China’s August data showed industrial production beating expectations at 5.2%, but retail sales slowed to 0.4% and fixed-asset investment declined 7.2%, creating a mixed outlook for the region’s growth-sensitive currencies and commodities. The U.S. dollar remained firm against the yen, gold stayed under pressure near $4,292, and crude oil climbed above $100 as supply-disruption fears intensified.

What does it mean for the Europe & US sessions?

European and U.S. traders should focus on the UK labour-market releases, German and Eurozone sentiment data, and the U.S. Empire State Manufacturing Index for clues about economic strength and central-bank expectations.

However, the broader market tone is likely to remain heavily influenced by rising oil prices and geopolitical tensions in the Middle East, which are pushing inflation concerns and government bond yields higher. With the Federal Reserve beginning its policy meeting today ahead of Wednesday’s decision, volatility could increase across the U.S. dollar, gold, equities, and oil, while the pound and euro may react sharply to any surprises in their respective economic data

The Dollar Index (DXY)

Key news events today

No major news event

What can we expect from DXY today?

The US dollar is trading with a bullish bias today, supported by rising expectations of a Federal Reserve interest-rate hike on Wednesday, 16 September. The Dollar Index (DXY) is near 99.55, close to a two-week high, while the US 10-year Treasury yield has moved above 5%, increasing the appeal of dollar-denominated assets. Surging oil prices around $107 per barrel and continuing Middle East tensions are also supporting safe-haven demand and raising inflation concerns. Markets are pricing in approximately a 93% probability of a 25-basis-point Fed hike, although traders will focus on whether the Fed signals further increases.

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
Medium Bullish

Gold (XAU)

Key news events today

No major news event

What can we expect from Gold today?

Gold is facing renewed selling pressure today as a stronger U.S. dollar, rising Treasury yields, and growing expectations of a Federal Reserve interest-rate hike weigh on the non-yielding metal. Gold futures recently fell around 1.3% to approximately $4,310 per ounce, their lowest closing level since early August, while the U.S. 10-year Treasury yield briefly moved above 5%. Oil prices above $100, driven by Middle East supply concerns, are also increasing inflation fears and strengthening expectations for tighter Fed policy.

Next 24 Hours Bias   
Medium Bearish

The Euro (EUR)

Key news events today

No major news event

What can we expect from EUR today?

The euro remains under pressure against the U.S. dollar as rising energy prices and stronger expectations of a Federal Reserve rate hike support the greenback. The ECB recently raised its deposit rate by 25 basis points to 2.50% on 10 September, responding to eurozone inflation, which reached 3.3% in August, well above its 2% target. ECB policymakers are now signalling that further tightening may be necessary if higher gas and oil prices continue feeding into consumer prices, although future decisions will remain data-dependent.

Central Bank Notes:

• The ECB enters October with its policy outlook dependent on the outcome of the 10 September meeting. The latest confirmed decision, from 23 July, kept the deposit facility at 2.25%, the main refinancing operations rate at 2.40%, and the marginal lending facility at 2.65%. The ECB continued to emphasise a meeting-by-meeting and data-dependent approach, with no commitment to a predetermined rate path.
• The euro-area economy remains resilient, but growth is still relatively modest. The latest ECB data show euro-area GDP at €4.1185 trillion in Q2 2026, up 1.2% quarter-on-quarter and 3.6% year-on-year in the latest reported data. However, the economic outlook remains vulnerable to elevated energy costs, geopolitical uncertainty and weaker external demand.
• Inflation remains the key issue for ECB policy. The ECB’s July assessment highlighted that energy prices remained highly volatile and significantly above pre-conflict levels, with the full inflationary impact of the energy shock still uncertain. The ECB is therefore closely monitoring direct energy effects as well as possible second-round effects through wages and broader price-setting behaviour.
• Professional forecasters continue to expect inflation to remain above target in 2026. The ECB’s Q3 Survey of Professional Forecasters projected headline HICP inflation at 2.7% for 2026, falling to 2.2% in 2027 and 2.0% in 2028. Core inflation, excluding energy, food, alcohol and tobacco, was projected at 2.4% in 2026 and 2.2% in 2027.
• Growth expectations have softened. The same ECB survey projects real GDP growth of only 0.6% in 2026, followed by 1.2% in 2027 and 1.3% in 2028. This combination of relatively weak growth and above-target inflation leaves the ECB facing a difficult policy trade-off heading into October.
• The ECB’s balance-sheet normalisation is expected to continue. The APP and PEPP portfolios continue to decline in a measured and predictable manner because the Eurosystem is no longer reinvesting principal payments from maturing securities. This gradual quantitative tightening is expected to continue unless financial-market conditions require the ECB to adjust its approach.
• The main risk for October is the combination of persistent inflation and weak growth. Higher oil and natural-gas prices could keep inflation above the ECB’s 2% target while simultaneously reducing household purchasing power and business activity. This could make the ECB more cautious about easing policy even if economic growth remains weak.

​The next meeting is on 29 October 2026

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 facing some near-term pressure as rising global bond yields and expectations of a U.S. Federal Reserve rate hike support the U.S. dollar. The USD/CHF has recently recovered as markets price in tighter U.S. monetary policy, while the CHF continues to benefit from its safe-haven status amid geopolitical tensions and elevated oil prices.

The SNB policy rate remains at 0%, with Switzerland’s very low inflation giving the central bank little immediate reason to tighten policy; however, the strong franc remains an important consideration for the SNB because it helps contain imported inflation but can weigh on exporters.

Central Bank Notes:

• At its monetary policy assessment on 18 June 2026, the Swiss National Bank left the SNB policy rate unchanged at 0.00%, in line with market expectations. Policymakers maintained that the current policy setting remains appropriate given low inflation and ongoing global economic uncertainty.
• Inflation remains exceptionally subdued in Switzerland. Recent data show consumer price growth staying comfortably within the SNB’s price stability range, with headline inflation around 0.6% year-on-year in May 2026, while underlying inflation pressures remain limited despite higher global energy prices.
• The SNB continues to view medium-term inflation pressures as largely unchanged. While energy prices linked to Middle East tensions have temporarily lifted near-term inflation expectations, the stronger Swiss franc has helped offset imported inflation, supporting the central bank’s decision to maintain rates at current levels.
• External risks remain elevated. Policymakers highlighted ongoing geopolitical tensions, trade uncertainties, and slower global growth prospects, particularly in key export markets such as the Eurozone and the United States. These factors continue to warrant a cautious policy approach.
• Swiss economic activity remains resilient but modest. GDP growth is expected to remain around 1–1.5% in 2026, supported by domestic demand, although manufacturing and export-oriented sectors continue to face challenges from a strong franc and softer foreign demand.
• The SNB reiterated its readiness to act if necessary. The Governing Board emphasized that it remains willing to intervene in foreign exchange markets to counter excessive Swiss franc appreciation and stands prepared to adjust policy should inflation or economic conditions deviate materially from expectations.

The next meeting is on 24 September 2026.

Next 24 Hours Bias
Medium Bearish

The Pound (GBP)

Key news events today

Claimant Count Change (6:00 am GMT)

Average Earnings Index 3m/y (6:00 am GMT)

What can we expect from GBP today?

Claimant Count Change forecast at +8.3K, compared with -11.0K previously, while Average Earnings Index 3m/y is expected at 3.9%, down from 4.1%. The weaker wage-growth forecast could reduce expectations for aggressive Bank of England tightening, potentially weighing on GBP if the figures come in as expected or weaker.

Conversely, stronger-than-expected employment or wage data could support the pound by reinforcing expectations that the BoE may need to keep rates higher. The BoE is currently expected to hold its 3.75% rate on Thursday, although markets increasingly anticipate a possible hike later this year as higher oil prices raise UK inflation risks.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) met on 29–30 July 2026, with the decision and updated Monetary Policy Report scheduled for publication on 30 July. The previous meeting in June resulted in a 7–2 vote to maintain the Bank Rate at 3.75%, with Megan Greene and Huw Pill voting for a 25-basis-point increase to 4.00%. The July meeting is particularly important because it includes a new Monetary Policy Report and updated economic projections.
• UK inflation has continued to move closer to the Bank’s 2% target. CPI inflation fell to 2.6% in June 2026, from 2.8% in May, while core CPI remained at 2.6%. Services inflation also eased from 3.7% to 3.6%, suggesting that underlying domestic price pressures are gradually moderating. Nevertheless, services inflation remains above the 2% target and continues to be an important consideration for the MPC.
• The inflation outlook remains complicated by energy-market developments. The earlier Middle East energy shock pushed inflation higher and created uncertainty around the speed at which inflation would return sustainably to target. Although energy prices have fallen from their earlier peaks, they remain elevated relative to pre-conflict levels. The MPC therefore continues to monitor the potential for energy costs to feed into wages, services prices and inflation expectations.
• The UK economy remains relatively subdued, with weak demand and signs of cooling in the labour market weighing against the upside inflation risks. The combination of slower economic activity and easing inflation creates a difficult policy balance for the MPC: keeping rates restrictive for too long could weaken growth further, while easing policy prematurely could allow persistent domestic inflation pressures to return.
• Wage growth and services inflation remain key risks for monetary policy. Although headline CPI has fallen substantially from earlier 2026 levels, the MPC is likely to remain cautious until there is greater evidence that domestic inflation pressures are sustainably declining. The moderation in services inflation to 3.6% is encouraging, but it remains above levels consistent with the Bank’s 2% inflation target.
• Quantitative tightening (QT) remains part of the Bank’s broader monetary-policy framework. The MPC continues reducing the stock of UK government bonds held for monetary-policy purposes through its balance-sheet reduction programme. At the June meeting, the stock of government bonds held for monetary-policy purposes stood at approximately £522 billion.
• The policy outlook remains highly data-dependent. With inflation moving lower but services inflation and wage pressures still elevated, the MPC faces a delicate balance between maintaining sufficiently restrictive policy and avoiding unnecessary damage to economic growth. Market participants had previously placed substantial probability on the Bank Rate remaining at 3.75% through the July meeting, although expectations for later meetings showed greater uncertainty, including the possibility of rate increases if inflation proves persistent.
• The next meeting is on 17 September 2026.
  
  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 is facing mixed forces today. On the positive side, surging oil prices are providing support for the commodity-linked CAD, with Brent crude rising above $106/barrel after attacks disrupted Saudi energy infrastructure and raised concerns about global supply. However, the U.S. dollar remains strong, supported by higher Treasury yields and expectations of a Federal Reserve rate hike, keeping USD/CAD around the 1.39 area and limiting CAD gains. August CPI was around 3%, while underlying inflation was relatively contained, giving the Bank of Canada room to remain cautious after holding its policy rate at 2.25% earlier this month.
​
Central Bank Notes:

• At its 2 September 2026 meeting, the Bank of Canada maintained the overnight rate target at 2.25%, keeping the Bank Rate at 2.50% and the deposit rate at 2.20%. This marks the seventh consecutive decision at 2.25%. While the decision was expected, the Bank’s communication became somewhat more cautious as inflation risks increased. Governor Tiff Macklem emphasized that the Bank remains prepared to adjust monetary policy if necessary to preserve price stability.
• The Canadian economy has strengthened significantly in the second quarter. GDP expanded at an annualized rate of 3.3% in Q2 2026, following very weak growth in Q1. The recovery was relatively broad-based, with consumer spending remaining resilient while housing activity, exports and business investment also improved. However, the Bank noted that some of the Q2 strength reflected temporary factors and that the sustainability of the recovery remains uncertain because of renewed trade tensions with the United States.
• The labour market has continued to improve, providing additional support for domestic demand. Employment increased by 75,000 in July, while the unemployment rate declined to 6.4%, its lowest level since July 2024. Wage growth, however, continued to moderate, with average hourly wages rising 2.8% year over year in July compared with 3.3% in June. The combination of stronger employment and moderating wages suggests that labour-market conditions are improving without generating an immediate resurgence in underlying inflation pressures.
• Inflation remains the key concern for the Bank. Headline CPI increased to 3.0% year over year in July, up from 2.8% in June. Much of the acceleration was driven by gasoline, with gasoline prices rising 25.7% year over year. Encouragingly, CPI excluding gasoline remained at 2.2%, while core inflation measures have stayed close to 2%. The Bank therefore continues to distinguish between temporary energy-driven inflation and more persistent underlying price pressures.
• Higher global oil prices have increased the upside risks to Canadian inflation. The continuing conflict in the Middle East, restrictions affecting shipments through the Strait of Hormuz, and elevated refinery margins have kept gasoline and other energy prices high. The Bank is currently looking through some of the direct impact of higher oil prices, but Governor Macklem warned that the longer energy prices remain elevated, the greater the risk that inflation becomes more persistent and spreads into other goods and services.
• US-Canada trade tensions have become a more significant downside risk to growth. New US tariffs on Canadian exports and Canada’s retaliatory measures are creating additional uncertainty for businesses. The Bank estimates that the products directly affected by the new tariffs account for around 5% of Canada’s exports to the United States, limiting the immediate economy-wide impact. Nevertheless, broader uncertainty could cause businesses to delay investment and hiring decisions, potentially slowing the recovery.
• The Bank’s policy stance remains data-dependent going into October. The BoC is balancing two opposing forces: stronger-than-expected economic activity and renewed inflation risks on one side, versus excess economic capacity and trade-related downside risks on the other. With inflation around 3% but underlying inflation closer to 2%, the Bank has so far chosen to remain on hold rather than immediately tighten policy.
• The next meeting is on 28 October 2026.

Next 24 Hours Bias
Medium Bullish

Oil

Key news events today

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Oil prices are rising sharply today, with Brent crude trading around $107/bbl and WTI around $103/bbl, as fresh attacks on Saudi energy infrastructure have intensified concerns about global supply. Saudi Arabia’s East-West oil pipeline has been taken offline, disrupting a key route that can move roughly 4 million barrels per day to the Red Sea and providing an alternative to the Strait of Hormuz. At the same time, heightened Houthi activity around the Red Sea and Bab al-Mandab is adding further shipping risks.

Next 24 Hours Bias
Strong Bullish