IC Markets Asia Fundamental Forecast | 12 August 2025

IC Markets Asia Fundamental Forecast |  12 August 2025

What happened in the U.S session?

Equities (especially tech and financials), Treasuries, and crypto assets were most impacted overnight, with price moves driven by anticipation of inflation data, buyback headlines, and chip export deals. Gold sold off after White House commentary, while battery metals (notably lithium) rallied on supply news. Macroeconomic trends (GDP, ISM, productivity, and trade data) reinforce a picture of cautious growth and market resilience, but the upcoming CPI is the main potential catalyst for bigger moves.

What does it mean for the Asia sessions?

Asian traders should prepare for increased volatility across currency, equity, and commodity markets in response to these critical economic prints and policy statements. Any surprises in RBA commentary or extent of rate easing could trigger sharp moves in AUD and Asian risk assets. Core and headline U.S. CPI will steer global risk appetite, affect dollar strength, and influence expectations for Fed action in September.UK wage growth impacts GBP and signals consumer spending trends in Europe, potentially rippling across broader markets.

The Dollar Index (DXY)

Key news events today

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

CPI m/m (12:30 pm GMT)

CPI y/y (12:30 pm GMT)

What can we expect from DXY today?

The US dollar is steady to modestly higher ahead of Tuesday’s CPI release and the US-China tariff deadline. Expectations are building for a Fed rate cut, and the outcomes of economic data and trade talks will set the tone for further dollar moves this week. The US Dollar index edged up to around 98.5 on Monday, recovering slightly from last week’s losses. Over the past month, the dollar has strengthened 0.47%, but it remains down 4.4% year-over-year. The dollar traded modestly higher against most major currencies ahead of key economic events, notably the release of US inflation data and the US-China tariff negotiation deadline. The dollar’s moves have been described as stable but cautious, reflecting general anticipation in the FX markets.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25% to 4.50% at its meeting on July 29–30, 2025, keeping policy unchanged for the fifth consecutive meeting.
• The Committee reiterated its objective of achieving maximum employment and inflation at the rate of 2% over the longer run. While uncertainty around the economic outlook has diminished since earlier in the year, the Committee notes that challenges remain and continued vigilance is warranted.
• Policymakers remain highly attentive to risks on both sides of their dual mandate. The unemployment rate remains low, near 4.2%–4.5%, and labor market conditions are described as solid. However, inflation is still somewhat elevated, with the PCE price index at 2.6% and core inflation forecast at 3.1% for year-end 2025, up from earlier projections; tariff-related pressures are cited as a contributing factor.
• The Committee acknowledged that recent economic activity has expanded at a solid pace, with second-quarter annualized growth estimates near 2.4%. However, GDP growth for 2025 has been revised downward to 1.4% (from 1.7% projected in March), reflecting expectations of a slowdown in the coming quarters.
• In the revised Summary of Economic Projections, the unemployment rate is expected to average 4.5% in 2025, and headline PCE inflation is forecast at 3.0% for the year, with core PCE at 3.1%. Policymakers continue to anticipate that inflation will moderate gradually, with ongoing risks from tariffs and global conditions.
• The Committee reaffirmed its data-dependent and risk-aware approach to future policy decisions. Officials stated they are prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede progress toward the Fed’s goals.
• As previously outlined, the Committee continues the measured run-off of its securities holdings. The pace of balance sheet reduction, which slowed since April (monthly redemption cap on Treasury securities reduced from $25B to $5B, while holding agency MBS cap steady at $35B), was left unchanged this month to support orderly market functioning and financial conditions.
• The next meeting is scheduled for 16 to 17 September 2025.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

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

CPI m/m (12:30 pm GMT)

CPI y/y (12:30 pm GMT)

What can we expect from Gold today?

Gold prices are consolidating near $3,355–$3,374 as the market awaits critical U.S. inflation data and trade deadline clarifications. Tariff and policy headlines have generated volatility, but central bank buying and dovish Fed expectations provide ongoing support, with the consensus leaning bullish but cautious for the days ahead. The latest U.S. jobs report disappointed, strengthening bets on a September rate cut. Today’s CPI release will be critical; if inflation exceeds expectations, it could pressure gold by delaying rate reductions.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

Cash rate (4:30 am GMT)

RBA monetary policy statement (4:30 am GMT)

RBA rate statement (4:30 am GMT)

RBA press conference (4:30 am GMT)

What can we expect from AUD today?

Today, the Australian Dollar faces downward pressure as the RBA is set to cut its cash rate to 3.60%, responding to softening inflation and labor data. AUD/USD has eased toward 0.6520, awaiting the official announcement and the RBA’s statement for clues on future policy moves. The general outlook suggests more rate cuts ahead, with both local and global factors influencing the currency’s trajectory throughout 2025.

Central Bank Notes:

• The RBA held its cash rate steady at 3.85% at the July meeting on 8 July 2025, following a 25bps reduction in May and in line with widespread market expectations after recent data showed inflation tracking within the target band.
• Inflation continues to ease from its peak, with higher interest rates helping to rebalance demand and supply across the Australian economy. Data for the June quarter signaled ongoing progress, though underlying pressures persist in certain sectors.
• Trimmed mean inflation for the June quarter likely remained near 2.9% and headline CPI around 2.4%, both within the RBA’s 2–3% target range. The Board noted further evidence of inflation convergence, but flagged that not all price categories are moving in tandem.
• Financial markets have shown increased volatility in the wake of global tariff and trade policy developments—especially as a result of recent U.S. and EU announcements. This has pushed asset prices higher but contributed to an uncertain outlook for domestic growth and employment.
• Private domestic demand showed a tentative recovery. Real household incomes improved and signs of easing household financial stress emerged, but some business sectors continued to face subdued demand, limiting their ability to pass on cost increases.
• Labour market conditions remained tight overall. Employment continued to expand, with low rates of underutilization. Business surveys suggest labour availability remains a constraint, though there are signs of a gradual easing compared to earlier in 2025.
• Underlying wage growth softened modestly, though unit labour cost growth remains elevated due to below-trend productivity gains. The Board remains attentive to developments in wage and productivity dynamics as cost pressures continue to evolve.
• Uncertainties persist for both domestic activity and inflation. Consumption growth has risen, but more slowly than anticipated three months ago, with global and domestic factors both contributing to the cautious outlook.
• There remains a risk that household spending picks up more slowly than forecast, which could result in ongoing subdued aggregate demand and a sharper deterioration in employment conditions.
• Given that inflation is expected to remain around the target band, the Board judged that it was appropriate to keep policy settings unchanged in July, maintaining a position that is still mildly restrictive.
• The Board continues to monitor all incoming data and assesses risks carefully, with a focus on global trends, domestic demand indicators, inflation outcomes, and the labour market outlook.
• The RBA remains committed to its mandate of price stability and full employment and stands ready to adjust policy as needed to achieve these objectives.
• The next meeting is on 11 to 12 August 2025.
  
  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 NZD is currently trading steadily but faces multiple headwinds: softer domestic data, probable rate cuts, new tariffs from the US on exports, and ongoing global uncertainties, particularly regarding China and US monetary policy. The outlook is mixed, with continued near-term pressure but some hope for recovery by the end of 2025 if economic conditions stabilize and trade tensions ease. The NZD/USD exchange rate is holding steady around $0.595 as of Monday, August 11, 2025, after a slight decline of about 0.23% from the previous session. Over the past month, NZD has weakened by 0.56% and is down 1.41% over the last year.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to hold the Official Cash Rate (OCR) at 3.25% on 9 July, marking the first pause following six consecutive rate cuts.
• The MPC cited heightened uncertainty and near-term inflation risks as reasons to wait until August for further action.
• Although the annual consumer price index inflation increased to 2.5% in the first quarter of 2025,  it remained within the MPC’s target range of 1 to 3%, noting that the outlook for medium-term inflation pressures has evolved broadly in line with the May MPS projections.
• While it is expected to be near the upper end of the band in the second and third quarters of this year, easing core inflation and spare capacity in the economy should help return it toward the 2% midpoint over time.
• The MPC noted that, despite global factors, domestic financial conditions are evolving broadly as expected, as mortgage and deposit interest rates have continued to decline, reflecting a lower OCR, strong bank liquidity, and soft credit growth.
• In aggregate, GDP growth over the December and March quarters was stronger than expected, reflecting a pickup in household consumption and business investment. However, higher-frequency indicators suggest weaker-than-expected growth in April and May.
• Large economic policy shifts overseas and concerns about sovereign risk could result in additional financial market volatility and increased bond yields, while prolonged economic uncertainty might induce further precautionary behaviour by households and firms, slowing the domestic economic recovery.
• Subject to medium-term inflation pressures continuing to ease in line with the Committee’s central projections, the Committee expects to lower the OCR further, broadly consistent with the projection outlined in May.
• The next meeting is on 20 August 2025.

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news event

What can we expect from JPY today?

The Japanese yen is showing stability and range-bound trading on Tuesday, August 12, 2025, while markets look for direction from both central bank policy clues and major economic releases. Mixed signals from the BoJ, alongside anticipation of US inflation data and potential Fed rate cuts, are keeping traders cautious, with significant moves possible as new data drops this week. The yen recently neared its highest level in two weeks against the dollar, but market movements remain cautious as traders wait for further signals on US Federal Reserve rate cuts and BoJ policy shifts.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 31 July, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
• The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
• The BOJ will maintain its gradual reduction of monthly outright purchases of Japanese Government Bonds (JGBs). The scheduled amount of long-term government bond purchases will, in principle, continue to decrease by about ¥400 billion each quarter from January to March 2026, and by about ¥200 billion each quarter from April to June 2026 onward, targeting a purchase level near ¥2 trillion in January to March 2027.
• Japan’s economy is experiencing a moderate recovery overall, though some sectors remain sluggish. Overseas economies are generally growing moderately, but recent trade policies in major economies have introduced pockets of weakness. Exports and industrial production in Japan are essentially flat, with any uptick largely driven by front-loaded demand ahead of U.S. tariff increases.
• On the price front, the year-on-year rate of change in consumer prices (excluding fresh food) remains in the mid-3% range. This reflects continued wage pass-through, previous import cost surges, and further increases in food prices, particularly rice. Expectations for future inflation have begun to rise moderately.
• The effects of the earlier import price and food cost increases are expected to fade during the outlook period. There may be a temporary stagnation in core inflation as overall growth momentum softens.
• Looking forward, the economy is likely to see a slower growth pace in the near term as overseas economies feel the pinch of ongoing global trade policies, putting downward pressure on Japanese corporate profits. Accommodative financial conditions are expected to buffer these headwinds somewhat. In the medium term, as global growth recovers, Japan’s growth rate is also expected to improve.
• With renewed economic expansion, intensifying labor shortages, and a steady rise in medium- to long-term expected inflation rates, core inflation is projected to gradually pick up. By the latter half of the BOJ’s projection period, inflation is forecast to move in line with the 2% price stability target.
• There are multiple risks to the outlook, with especially elevated uncertainty regarding the future path of global trade policies and overseas price trends. The BOJ will continue to closely monitor their impact on financial and foreign exchange markets, as well as on Japan’s economy and inflation.
• The next meeting is scheduled for 17 to 18 September 2025.

Next 24 Hours Bias

Strong Bullish

Oil

Key news events today

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Oil prices remain under pressure due to supply increases (OPEC+), uncertain demand (especially in the U.S. and China), and hopes for a Ukraine peace deal that could bring Russian oil back onto world markets. Local fuel prices in the Philippines will see notable rollbacks effective Tuesday, August 12, reflecting recent global trends and developments. After dropping more than 4% last week due to concerns about oversupply and weaker demand, both Brent and WTI crude prices remain subdued. As of August 11, Brent crude traded near $66.65 per barrel, while WTI hovered around $63.99 per barrel.

Next 24 Hours Bias

Weak Bearish