IC Markets – Asia Fundamental Forecast | 02 April 2026
What happened in the U.S. session?
Markets were primarily driven by renewed optimism that the U.S.–Iran conflict is nearing a de‑escalation phase, as President Trump signaled a near‑term withdrawal of forces and a possible “Hormuz‑off‑ramp,” which triggered a broad risk‑on move and pulled oil prices off their recent highs. This helped U.S. equities (especially the S&P 500 and Nasdaq) extend their strong rally, pushed Treasury yields lower amid rebuilt rate‑cut expectations, and most noticeably impacted oil futures and energy‑sensitive assets.
What does it mean for the Asia Session?
Renewed volatility around the Strait of Hormuz and energy markets, mixed China PMI data with higher cost pressures, and a still‑hawkish‑leaning BOJ‑April‑hike narrative, all against a backdrop of elevated crude prices and a fresh South Korean energy‑support budget; together, these themes are likely to keep FX, energy‑linked equities, and Japanese‑ and Korean‑listed tech styles in the spotlight at the start of the Asian session.
The Dollar Index (DXY)
Key news events today
President Trump Speaks (1:00 am GMT)
Unemployment Claims (12:30 pm GMT)
What can we expect from DXY today?
The US Dollar showed mixed performance amid ongoing geopolitical tensions and anticipation of key policy announcements. Reports indicate the Dollar Index (DXY) held around the 100 level after reclaiming it late March, bolstered by rising energy prices from the Iran conflict, which benefits the US as an oil exporter, and the Fed’s policy rate range of 3.50%-3.75% appearing more persistent.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) is widely expected to hold the federal funds rate target range steady at 3.50%–3.75% at its March 17–18, 2026, meeting, amid rising oil prices from the US-Israel war against Iran and persistent inflation pressures, delaying any 2026 cuts potentially to September.
- The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market weakening further as nonfarm payrolls declined by 92,000 in February 2026 and the unemployment rate rose to 4.4% from 4.3% in January.
- Officials face tilted risks from geopolitical tensions, elevated oil prices, and sticky inflation, with CPI steady at 2.4% year-over-year in February 2026, headline PCE at 2.8% in January, and core PCE rising to 3.1%.
- Economic activity has cooled after robust Q4 2025 growth near 5%, with the Atlanta Fed GDPNow now estimating Q1 2026 growth at around 2.1%–2.7% amid softer consumer spending and labor data.
- December 2025’s Summary of Economic Projections forecasts 2025 unemployment at a median of 4.5%, 2026 GDP growth at 2.3%, and core PCE at 2.5%, with the dot plot signaling one more cut in 2026 to a median 3.4% funds rate; March updates may reflect softer labor and inflation upticks.
- The Committee maintains its data-dependent stance amid a softening labor market, inflation above target, and new oil shocks, likely holding rates at 3.50%-3.75% with ongoing divisions and possible hawkish dissents on rate cuts.
- The FOMC continues its adjusted quantitative tightening, with Treasury rolloff caps at $5 billion per month and agency MBS at $35 billion per month to ensure ample reserves post-2025 program adjustments.
- The next meeting is scheduled for 28 to 29 April 2026.
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
President Trump Speaks (1:00 am GMT)
Unemployment Claims (12:30 pm GMT)
What can we expect from Gold today?
Gold is moving modestly higher on Thursday, as renewed geopolitical strains with Iran and dovish central‑bank expectations keep safe‑haven demand solid, even as the metal consolidates after a sharp rally into early‑year record highs above $4,800 per ounce. April‑2026 futures are trading in the mid‑4,600s, reflecting a bullish but increasingly range‑bound technical picture where traders are watching for a breakout above the 5,100–5,200 resistance zone or a drop back toward 4,600 support.
Next 24 Hours Bias
Medium Bullish
The Australian Dollar (AUD)
Key news events today
No major news event
What can we expect from AUD today?
The Australian Dollar (AUD) saw modest gains against the US Dollar, with AUD/USD rising to around 0.6936, up 0.52% from the prior session amid a risk-on market mood and US Dollar selling pressure. However, it had weakened significantly earlier in the week to about 0.685, its lowest since January 23, driven by Middle East tensions boosting energy prices and safe-haven demand for the USD.
Central Bank Notes:
- The Reserve Bank of Australia (RBA) is expected to hold its cash rate at 3.85% at the March 16-17, 2026 policy meeting, following the widely anticipated 25 basis point hike to 3.85% in early February after persistent inflation pressures from late 2025. While some banks like CBA, NAB, and Westpac now forecast a further 25 basis point rise to 4.10% as soon as May if inflation data remains sticky, consensus tilts toward a pause in March to assess incoming monthly CPI and labor market signals. The February hike reversed prior cuts, entering mildly restrictive territory amid capacity pressures, with the board emphasizing data dependence.
- Inflation remains elevated, with December 2025 CPI at 3.8% year-on-year and trimmed mean at 3.3%, above the 2–3% target midpoint. RBA’s February Statement revised forecasts higher, projecting trimmed-mean inflation to peak in mid-2026 above 3% and remain elevated through early 2027, driven by services, housing, and demand resilience despite some monthly cooling, such as January’s 0.2% MoM gauge. Monthly CPI data continues to highlight core stickiness beyond energy rebates, delaying the target return to late 2027 or beyond.
- January 2026 monthly indicators showed modest easing, but headline CPI risks upward surprises from housing (up recently) and services amid firm domestic demand. Trimmed mean pressures persist from wage growth and capacity constraints, with consumer expectations ticking to 5% YoY in February surveys. Enhanced monthly reporting sharpens vigilance on potential broad-based pick-up.
- The labor market shows softening, with unemployment around 4.1-4.4%, down slightly to 4.1% in December, but unit labor costs are elevated due to subdued productivity. Household spending faces higher borrowing costs post-hike, yet private demand recovery sustains capacity strains. Vulnerabilities persist amid resilient employment dynamics.
- Global growth modestly revised up but tempered by geopolitics and commodity volatility; policy now restrictive post-February, with the RBA balancing inflation against employment risks. Data from the monthly CPI and Q1 GDP will guide, amid household debt sensitivities.
- Sustained restrictive stance post-February anchors inflation return to target, upholding dual mandate with flexibility to new risks like further inflation upticks.
- Markets price a March hold at 3.85%, with big four banks split: CBA, NAB, Westpac eye May hike to 4.10% if persistence continues, while others see limited upside unless acceleration. Upcoming monthly CPI pivotal for Q2 trajectory.
- Policy vigilance counters inflation stickiness against household fragilities and global uncertainties, reaffirming adaptability under dual mandate.
- Base case favors March hold with risks tilted hawkish for further hikes if data is hot; monthly indicators key to 2026 path.
- The next meeting is on 5 to 6 May 2026.
Next 24 Hours Bias
Medium 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) has seen limited specific updates for April 2, 2026, based on available recent market data up to late March, with no confirmed intraday developments reported as of early evening BST. Recent trends show the NZD trading around the $0.580 level against the USD, holding declines amid Reserve Bank of New Zealand (RBNZ) comments on looking through temporary energy-driven inflation while remaining open to rate hikes if pressures persist.
Central Bank Notes:
- The Monetary Policy Committee (MPC) left the Official Cash Rate (OCR) unchanged at 2.25% at its 18 February 2026 meeting, as widely expected, maintaining a unanimous decision and emphasizing a balance between supporting the nascent economic recovery and ensuring inflation returns sustainably to the 2% midpoint of the 1–3% target band.
- The Committee judged that the prior cumulative easing of 325 basis points provides ongoing stimulus, warranting patience amid uneven recovery signals, while noting readiness to normalize policy gradually as inflation pressures subside and activity strengthens.
- Headline CPI inflation, recently at 3.1%, is projected to dip back within the target band in the coming quarter—supported by spare capacity, modest wage growth, and declining food/fuel prices—before reaching 2.0% by mid-2027, with two-year-ahead business expectations edging up to 2.37%.
- Domestic demand shows gradual stabilization with softer household spending and a muted housing market, partially offset by easing retail rates boosting budgets, though cautious consumption, low migration, and a weak labour market continue to cap services inflation as wage moderation takes hold.
- Financial conditions remain accommodative as lower OCR flows through to borrowing costs, aiding mortgage approvals and housing sentiment, but business credit growth stays subdued amid uneven confidence and sensitivity to the recovery’s pace.
- Recent indicators point to weak but steadying GDP momentum in an early-stage rebound from 2025 lows, with high-frequency data showing gradual broadening despite persistent headwinds from elevated costs, fragile sentiment, and subdued investment.
- External risks are now viewed as balanced rather than downside-skewed, with a supportive global backdrop offsetting prior concerns over China and US trade policy, while a lower NZ dollar aids exports and tradables inflation.
- Looking to mid-2026, the MPC adopted a data-dependent stance with forecasts signaling OCR hikes likely from late 2026 or early 2027—potentially as soon as December if activity or inflation exceeds projections—while keeping policy accommodative for now if the gradual recovery aligns with expectations.
- The next meeting is on 7 April 2026.
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
Key news events today
No major news event
What can we expect from JPY today?
The Japanese Yen remained range-bound amid a lack of major catalysts, building on February-March volatility where it reclaimed ground to 155-156 USD/JPY following BoJ’s open door to near-term hikes despite CPI shortfalls and political headwinds from PM Takaichi’s low-rate stance.
Central Bank Notes:
- The Policy Board of the Bank of Japan meets on 18–19 April 2026, with markets anticipating the short-term policy rate to remain at 0.75%, as the bank continues evaluating the December 2025 and prior hikes’ effects amid data-dependent normalization.
- The BOJ will target the uncollateralized overnight call rate around 0.75% and indicate future hikes hinge on impacts to lending, financing, and activity, with Governor Ueda signaling scrutiny of data for potential moves in April or later meetings.
- JGB tapering advances per plan, cutting outright purchases by ¥400 billion quarterly through Q1 2026 and slowing to ¥200 billion from April onward, targeting roughly ¥2-3 trillion monthly by mid-2026, adjustable for market stability
- Japan’s economy maintains moderate growth into Q1 2026, building on Q4 2025 rebound via exports and fiscal measures, though manufacturing sentiment holds soft amid overseas demand weakness and yen pressures.
- Core CPI (ex-fresh food) likely stays near 2.3-2.5% y/y in early 2026 Tokyo prints, off prior highs but above 2%, while core-core hovers around 2.6%, reflecting sustained but easing inflationary forces.
- Input costs ease further from import peaks, yet services inflation, 5% wage targets in shunto talks, and anchored expectations above 2% support price persistence, with upside risks from yen and geopolitics.
- Near-term real GDP may ease below trend due to tightening and external shocks like Iran tensions, but negative real rates, wage gains, and stimulus should underpin consumption and capex rebound.
- Medium-term, overseas recovery, labor shortages, and productivity lifts are set to fuel wages and core inflation near/above 2%, enabling gradual hikes toward 1% if conditions align.
- The next meeting is on 27 to 28 April 2026.
Next 24 Hours Bias
Strong Bearish
Oil
Key news events today
No major news event
What can we expect from Oil today?
Oil markets show continued volatility amid geopolitical tensions and supply adjustments. Brent crude hovered around $101 per barrel, down slightly due to easing concerns over Strait of Hormuz disruptions, while WTI traded near $100, supported by low inventories but pressured by forecasts of growing global supply surpluses.
Next 24 Hours Bias
Medium Bullish
