IC Markets – Asia Fundamental Forecast | 01 October 2026

IC Markets – Asia Fundamental Forecast | 01 October 2026

What happened in the U.S. session?

Inflation was softer than expected, which initially reduced expectations for an October Fed hike, but stronger GDP growth and a 90,000 increase in private employment pointed to continued economic resilience. The result was a sharp reversal in Treasury markets, with the 10-year yield climbing to 5.304%, while stocks finished mixed. For traders, the key relationships were PCE and Fed-rate expectations, Treasury yields, USD, gold, and equities, with oil’s elevated price adding to concerns about future inflation.

What does it mean for the Asia Session?

The BOJ’s Summary of Opinions and the Tankan survey could provide fresh clues about the timing and pace of further Japanese rate increases, making USD/JPY and the yen particularly sensitive to the releases. South Korea’s trade and manufacturing figures will provide another important read on Asian economic and semiconductor demand. China being closed for its holiday will reduce mainland market activity, although China-related commodity and demand headlines can still move AUD, oil, copper, and iron ore.
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The Dollar Index (DXY)

Key news events today

Unemployment Claims (12:30 pm GMT)

FOMC Member Waller Speaks (2:00 pm GMT)

ISM Manufacturing PMI (2:00 pm GMT)

What can we expect from the DXY today?

The dollar enters October with strong momentum, but the outlook is becoming more data-dependent. The greenback has benefited from elevated Treasury yields and expectations that U.S. rates could remain higher for longer, while softer-than-expected August inflation has taken some pressure off the Fed to raise rates again in October. Today’s jobless claims and ISM Manufacturing data, followed by Friday’s September employment report, are therefore particularly important for determining whether the recent dollar strength continues.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) raised the federal funds target range by 25 basis points to 3.75%–4.00% at its September 15–16, 2026, meeting. The decision was approved unanimously by a 12–0 vote, marking a shift from the July meeting, when rates were held at 3.50%–3.75%. The Fed said the move was intended to support its dual mandate and promote a more timely return of inflation toward its 2% objective.
• The labor market remains relatively resilient. The September FOMC statement said job gains have kept pace with workforce growth and that the unemployment rate has changed little. The Fed continues to monitor employment conditions closely alongside inflation when determining the appropriate path for monetary policy.
• Inflation remains above the Federal Reserve’s 2% target and continues to be a key policy concern. The September decision explicitly noted that inflation remains elevated. The latest projections put median headline PCE inflation at 3.7% for 2026, before falling to 2.3% in 2027, 2.1% in 2028, and 2.0% in 2029. Core PCE inflation is projected at 3.4% in 2026, declining to 2.5% in 2027 and 2.2% in 2028.
• Economic activity continues to expand at a solid pace. The Fed highlighted resilient domestic spending, strong productivity growth, and robust capital investment, although uncertainty remains elevated partly because of geopolitical developments. The September projections raised the median 2026 GDP-growth forecast to 2.3%, compared with 2.2% in the June projections.
• The September projections show a higher expected policy-rate path than in June. The median projection for the federal funds rate is now 4.1% at the end of 2026, compared with 3.8% in the June projections. The median is projected at 4.1% in 2027, 3.9% in 2028, and 3.6% in 2029. This indicates that policymakers’ projected rate path remains relatively restrictive while inflation is expected to move gradually toward the target.
• Chair Kevin Warsh continues to emphasize the importance of returning inflation to 2%. Ahead of the September meeting, Warsh indicated that the Fed would have further work to do if policymakers could not gain sufficient confidence that inflation was moving toward the 2% objective. The September decision subsequently delivered a 25-basis-point hike, while the Committee continued to emphasize its assessment of incoming economic data and risks.
• The September economic projections show a more balanced growth outlook but continued inflation risks. The median unemployment forecast is 4.1% for 2026 and 2027, while the Fed projects GDP growth of 2.3% in 2026 and 2.4% in 2027. At the same time, PCE inflation is expected to remain substantially above target through 2026 before moving closer to 2% over subsequent years.
• The next meeting is scheduled for 27 to 28 October 2026.

Next 24 Hours Bias

Medium Bullish 

Gold (XAU)

Key news events today

Unemployment Claims (12:30 pm GMT)

FOMC Member Waller Speaks (2:00 pm GMT)

ISM Manufacturing PMI (2:00 pm GMT)

What can we expect from the Gold today?

Softer-than-expected U.S. inflation has reduced immediate expectations for another Fed hike and could support gold through lower yields and a weaker dollar. However, elevated oil prices, persistent inflation concerns, relatively high Treasury yields, and continued expectations for tighter Fed policy are keeping pressure on the metal. With gold having fallen roughly 6.6% in September, traders are likely to focus heavily on U.S. employment data and movements in Treasury yields and the dollar for the next major direction signal.

Next 24 Hours Bias
Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news event

What can we expect from the AUD today?

The RBA’s 4.60% cash rate and still-high 4.0% inflation provide some underlying support for the AUD, but the softer-than-expected CPI details have reduced expectations for another immediate rate hike. At the same time, Australia’s weakening housing market highlights the economic cost of tighter monetary policy. Meanwhile, US dollar movements, US inflation/rate expectations, commodity prices and global risk sentiment remains important for AUD/USD. Early Thursday trading has the AUD around US$0.695, while Brent crude remains above US$100, adding another inflation-related variable for both Australia and global markets.

Central Bank Notes:

• The RBA raised the cash rate by 25bps to 4.60% on 29 September, its fourth hike of 2026. The RBA said further tightening remains possible if inflation stays elevated.
• July CPI eased to 3.5% year-on-year, but trimmed-mean inflation remained at 3.6%, showing that underlying price pressures are still above the RBA’s 2–3% target. August CPI is due on 30 September.
• Unemployment increased to 4.6% in August, while employment rose by around 39,000. The labor market is cooling gradually but remains relatively resilient.
• Wage growth rose 0.8% quarter-on-quarter and 3.2% year-on-year in Q2 2026. Slower annual wage growth could help reduce inflation pressure, although wage growth remains elevated compared with pre-pandemic levels.
• Higher interest rates are weighing on household spending and housing activity. The RBA noted that consumer spending is easing gradually and new housing loans have declined.
• Higher global oil prices and Middle East tensions are creating additional inflation risks for Australia. The RBA is also monitoring global growth, China, and commodity prices.
• Markets will closely watch August inflation, employment, wages, consumer spending, and global energy prices for clues about the RBA’s next move.

• The next meeting is on 2-3 October 2026.

Next 24 Hours Bias

Medium Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news event

What can we expect from the NZD today?

The RBNZ’s relatively hawkish stance and expectations for another rate increase are supportive, while New Zealand’s modest economic recovery and stronger Chinese data provide additional positives. However, the kiwi remains vulnerable because U.S. yields have been elevated, and NZD/USD has recently fallen sharply. The softer U.S. PCE inflation reading and reduced expectations for an immediate Fed hike provided some relief to NZD on Wednesday. For today’s session, the key themes are U.S. rate expectations, RBNZ October-hike pricing, Chinese growth signals, and New Zealand’s building-consent data.

Central Bank Notes:

• The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points to 2.75% at its 2 September 2026 Monetary Policy Statement meeting. The decision was reached by consensus, marking another step in the bank’s tightening cycle as policymakers seek to bring inflation sustainably back toward the 2% midpoint.
• Inflation remains the key reason behind the RBNZ’s tightening stance. Annual consumer inflation increased to 4.1% in the June 2026 quarter, driven largely by higher fuel prices associated with the Middle East conflict. The RBNZ expects inflation to remain above 3% for the remainder of 2026 before returning to the 1–3% target range next year and moving toward the 2% midpoint.
• Energy prices and geopolitical developments remain an important upside risk to inflation. Higher petrol and diesel prices have increased transportation and production costs, feeding into prices for goods and services such as food and air travel. The RBNZ remains concerned that renewed increases in energy prices could make inflation more persistent than currently expected.
• The RBNZ indicated that further OCR increases may still be required this year, but policy is not on a predetermined path. Future decisions will depend on the balance of risks to medium-term inflation, including inflation expectations, domestic price pressures, economic activity, and the response of households and businesses to tighter financial conditions.
• New Zealand’s economic recovery appears to have resumed, although growth remains uneven. Economic activity was lacklustre during the June quarter as higher fuel costs reduced household purchasing power. However, stronger export prices and resilient demand from trading partners are supporting income growth and investment, particularly in export-oriented sectors.
• Household demand and the housing market remain areas of weakness. Weak income growth, job insecurity, and relatively flat house prices continue to weigh on household spending and residential investment, particularly in Auckland and Wellington. The RBNZ nevertheless expects the recovery to strengthen gradually as inflation declines and purchasing power improves.
• The labor market remains relatively soft, but the Bank expects conditions to improve as economic activity strengthens. High unemployment and subdued household demand remains a concern, but stronger economic growth should gradually encourage businesses to increase hiring. This creates a delicate balance for the RBNZ between containing inflation and avoiding unnecessary weakness in employment and output.
• The RBNZ continues to see strong export performance as an important support for the economy. New Zealand’s agricultural and other export sectors are benefiting from resilient global demand and strong commodity prices, helping offset weakness in domestic consumption and residential investment.
• The next meeting is on 28 October 2026.

Next 24 Hours Bias

Medium Bearish

The Japanese Yen (JPY)

Key news events today

 Tokyo Core CPI y/y (11:30 pm GMT)

What can we expect from the JPY today?

The yen enters Thursday with a more supportive fundamental backdrop, but it remains under pressure around the 157-per-dollar area. The biggest development is the apparent shift in the BOJ toward more frequent rate hikes, as policymakers become increasingly concerned that inflation could remain above target. Today’s Tankan survey is therefore important: evidence of stronger corporate conditions or higher inflation expectations could increase expectations for another rate increase and provide support for the yen. At the same time, Japan’s continued intervention warnings create additional downside risk for USD/JPY if the yen weakens sharply.

Central Bank Notes:

• The BOJ raised its policy rate by 25 basis points to 1.25% at its September 17–18 meeting, the highest level in 31 years. The decision passed 7–2.
• The BOJ said underlying inflation remains firm and is increasingly consistent with its 2% price-stability target, supported by wage growth and services prices.
• Further rate hikes remain possible, but the BOJ will continue to assess wage growth, inflation, economic activity, and financial-market conditions before making additional adjustments.
• The Bank continues its gradual reduction of Japanese Government Bond purchases while retaining flexibility to respond if market volatility becomes excessive.
• Japan’s economy continues to expand moderately, supported by domestic demand and business investment, although global trade uncertainty, geopolitical risks, and higher energy costs remain important risks.
• Yen weakness remains a key concern, as depreciation can increase imported inflation. The BOJ is closely monitoring exchange-rate movements and their impact on prices and financial conditions.
• Governor Kazuo Ueda signalled that the September hike reflects growing confidence that inflation is becoming more sustainable, while the two dissenting members preferred to wait before tightening further.
• Looking ahead: The BOJ remains on a gradual normalization path. Future hikes will depend mainly on inflation, wages, domestic demand, and financial conditions rather than a fixed timetable.
• The next meeting is on 29 to 30 October 2026.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news event

What can we expect from the Oil today?

Brent remains above $100 while WTI is around $90, following strong September gains. The biggest bullish catalyst is the continued uncertainty surrounding the U.S.–Iran situation, which is keeping the possibility of further Middle Eastern supply disruptions in focus. At the same time, tight gasoline and especially diesel markets are providing additional support.

However, recovering Gulf exports, rising U.S. crude inventories, and expectations that OPEC+ will leave November production targets unchanged are acting as counterweights. The 4 October OPEC+ meeting and developments in U.S.–Iran negotiations are therefore two of the most important events for crude traders to monitor.

Next 24 Hours Bias
Medium Bearish