IC Markets – Asia Fundamental Forecast | 17 June 2026

IC Markets – Asia Fundamental Forecast | 17 June 2026

What happened in the U.S. session?

Markets were primarily driven by positioning ahead of the upcoming June 16–17 Federal Reserve meeting, alongside fresh macroeconomic releases and geopolitical developments tied to oil supply expectations. The key macro release was the June Empire State Manufacturing Survey, which pointed to a moderation in manufacturing momentum versus prior strong readings, reinforcing a cautious growth outlook ahead of the Fed. Investors also continued repricing expectations around interest rates as markets increasingly expect the Fed to remain on hold but maintain a relatively hawkish tone due to sticky inflation and resilient labor-market data.

What does it mean for the Asia Session?

The Federal Reserve (FOMC) rate decision, U.S. retail sales data, post-BOJ reaction in the Japanese yen, and ongoing oil-price volatility linked to the U.S.–Iran developments. The market is widely expecting the Fed to keep rates unchanged, but traders will closely watch the statement and comments from new Fed Chair Kevin Warsh for clues on future tightening, which could create strong volatility in USD pairs, gold, and risk assets during late Asian and early U.S. sessions.
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The Dollar Index (DXY)

Key news events today

Core Retail Sales m/m (12:30 pm GMT)

Retail Sales m/m (12:30 pm GMT)

President Trump Speaks (1:30 pm GMT)

Federal Funds Rate (6:00 pm GMT)

FOMC Economic Projections (6:00 pm GMT)

FOMC Statement (6:00 pm GMT)

FOMC Press Conference (6:30 pm GMT)

What can we expect from DXY today?

The U.S. Dollar is trading cautiously today, as markets focus heavily on the outcome of the two-day Federal Reserve meeting and guidance from new Fed Chair Kevin Warsh. The dollar has softened slightly against major peers after recent gains, with traders reducing aggressive bullish positions ahead of the Fed decision. Despite easing geopolitical tensions following progress in U.S.–Iran diplomacy, the Dollar is still finding medium-term support from elevated U.S. inflation, higher Treasury yields, and expectations that the Fed may keep rates restrictive for longer.

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 April 28–29, 2026, meeting, as oil prices remain elevated around $108 per barrel for Brent crude amid ongoing US-Israel tensions with Iran, alongside surging inflation from energy shocks, further delaying any 2026 rate cuts potentially beyond September.
• The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market showing mixed signals as nonfarm payrolls rose by 178,000 in March 2026—beating lowered expectations but driven partly by strike reversals—and the unemployment rate edged down to 4.3% from 4.4% in February.
• Officials face heightened risks from geopolitical tensions, soaring oil prices, and accelerating inflation, with CPI jumping to 3.3% year-over-year in March 2026 from 2.4% in February due to a 10.9% monthly energy surge, headline PCE pressured higher, and core PCE estimates around 3.1% or more.
• Economic activity continues to cool after robust Q4 2025 growth near 5%, with the Atlanta Fed GDPNow estimating Q1 2026 growth at 1.3% amid softer consumer spending, strike impacts, and labor data despite some resilience.
• March 2026’s Summary of Economic Projections forecasts 2026 unemployment at a median around 4.4%, GDP growth revised higher, and core PCE up to 2.7%, with the dot plot still signaling one cut in 2026 to a median 3.25%–3.50% funds rate amid softer labor but inflation upticks.
• The Committee maintains its data-dependent stance amid a mixed labor market, inflation well above target from oil shocks, and geopolitical risks, likely holding rates at 3.50%-3.75% with persistent divisions and hawkish tones on 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 manage reserves amid post-2025 balance sheet adjustments.
• The next meeting is scheduled for 16 to 17 June 2026.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

Core Retail Sales m/m (12:30 pm GMT)

Retail Sales m/m (12:30 pm GMT)

President Trump Speaks (1:30 pm GMT)

Federal Funds Rate (6:00 pm GMT)

FOMC Economic Projections (6:00 pm GMT)

FOMC Statement (6:00 pm GMT)

FOMC Press Conference (6:30 pm GMT)

What can we expect from Gold today?

Gold prices are trading cautiously today, Wednesday, as traders focus on the outcome of the ongoing U.S. Federal Reserve meeting (June 16–17) and its implications for interest rates. Geopolitical uncertainty and central-bank demand continue to support gold as a safe-haven asset, but expectations of a higher-for-longer interest-rate environment are limiting upside momentum because elevated yields tend to reduce the appeal of non-yielding assets like gold.

Next 24 Hours Bias
Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news event

What can we expect from AUD today?

The Australian dollar (AUD) is trading with a cautious but slightly supported tone today, after the Reserve Bank of Australia held its cash rate unchanged at 4.35% during its June policy meeting. While the pause was widely expected, the key market driver was the RBA’s hawkish hold, as policymakers warned that further rate hikes are still possible if inflation remains elevated. Governor Michele Bullock highlighted persistent inflation pressures and geopolitical risks tied to energy markets, especially around oil supply uncertainty in the Middle East.

Central Bank Notes:

• The Reserve Bank of Australia (RBA) kept its cash rate unchanged at 4.35% at the 15–16 June 2026 meeting, maintaining a restrictive policy stance as policymakers assessed whether the May rate increase was sufficient to contain renewed inflation pressures.
• The RBA voted to hold the cash rate at 4.35%, reiterating that inflation remains too high and warning that monetary policy may need to stay restrictive for an extended period, while leaving the door open to further tightening if price pressures persist.
• Inflation remains elevated, with headline CPI still above the RBA’s 2–3% target range, while underlying inflation measures, particularly trimmed mean CPI, continue to show sticky price pressures in services, rents, insurance, and household expenses, complicating the disinflation process.
• Labour-market conditions remain relatively resilient despite signs of gradual cooling, with unemployment staying historically low and wage growth still elevated enough to risk reinforcing inflation persistence, especially in labour-intensive service sectors.
• External risks remain important to the outlook, as elevated commodity prices and ongoing geopolitical tensions in the Middle East continue to pose upside risks to energy costs and imported inflation, while slower growth in major trading partners—particularly China—creates downside risks for Australian exports.
• Financial markets broadly price the cash rate remaining at 4.35% through July, with expectations favouring an extended pause unless inflation or labour-market data materially surprise to the upside; however, markets still assign a limited probability of one additional hike later in 2026.
• The RBA continues to stress a “data-dependent” policy framework, emphasizing that future decisions will be guided by inflation, employment, wages, and consumer-spending data, while balancing the need to restore price stability without unnecessarily weakening economic activity.
• The June communication maintained a hawkish-neutral tone, acknowledging some progress in inflation moderation but emphasizing that risks remain skewed to the upside, particularly from sticky domestic services inflation and external energy-price shocks, supporting a cautious approach into the July meeting.
• The next meeting is on 6 to 7 July 2026.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

GDP q/q (10:45 pm GMT)

What can we expect from NZD today?

The New Zealand dollar (NZD), also known as the “Kiwi,” is trading with a mildly supportive tone today, Wednesday, as traders continue to assess the outlook for the Reserve Bank of New Zealand (RBNZ) and global risk sentiment. The NZD has recently found support from expectations that the RBNZ may keep a relatively hawkish stance after holding the Official Cash Rate at 2.25% in late May while signaling the possibility of further tightening if inflation remains elevated. 

Central Bank Notes:

• The Reserve Bank of New Zealand’s Monetary Policy Committee (MPC) held the Official Cash Rate (OCR) steady at 2.25% at its 27 May 2026 Monetary Policy Statement, but the decision was unprecedented—a 3-3 split requiring Governor Anna Breman’s casting vote. Three members (Hansen, Gourley, Gai) voted for an immediate 25bp hike to 2.50%, while three (Breman, Silk, Conway) voted to hold.
• While the OCR remained unchanged, the RBNZ issued its most hawkish guidance since the cutting cycle ended, stating the OCR will “likely need to rise sooner and by more than previously envisioned.” Market pricing now indicates a 72–73% probability of a rate hike at the next meeting on 8 July 2026, with swaps pricing in roughly 16bps of tightening.
• Annual CPI inflation remained at 3.1% in Q1 2026 (above the 1–3% target band) for two consecutive quarters. The RBNZ now forecasts inflation to peak at 4.3% in the September 2026 quarter—driven by Middle East oil shocks—before returning to the 2% target midpoint by mid-2027.
• The RBNZ revised its terminal OCR forecast upward to 3.28% over the next three years (from 3.0%), implying approximately 100 basis points of total tightening ahead. The updated path suggests at least two additional hikes by year-end 2026, with the OCR potentially rising to 2.50% by September 2026 and higher thereafter.
• GDP growth is projected at 0% in Q2 2026 and only 0.2% quarter-on-quarter in Q3, reflecting an early but unconvincing recovery. Unemployment, currently at 5.3% (near a decade-high), is expected to peak at 5.4% and remain there until June 2027.
• Retail sales volume rose 0.9% in Q1 2026, and electronic card data showed 2.7% annual growth in March, but high-frequency data reveals shrinking budget room as wholesale interest rates climb. Mortgage holders are increasingly shifting to two-year fixed rates for repayment certainty despite the OCR hold.
• Stronger dairy and meat export revenues (meat exports up 7% to $13.2B FY2026) and a softer NZD (TWI ~68%) support the external balance, while Middle East oil volatility poses upside inflation risks. The NZD jumped 0.7% against the USD immediately after the announcement, and two-year swap rates rose 3bps.
• Markets now expect the first hike in this tightening cycle, with the MPC’s internal division suggesting any future decision may again be contentious. Policy remains below the ~3% neutral rate, but the shift from “wait-and-see” to “preemptive tightening” is now clear.
• The next meeting is on 8 July 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 (JPY) remains a major focus in FX markets today, after the Bank of Japan unexpectedly raised its benchmark interest rate to 1.0%, the highest level since 1995, at its June policy meeting. Despite the rate hike, which would normally support the currency, the yen has struggled to strengthen meaningfully, with USD/JPY hovering near the psychologically important 160 level as traders continue to favor carry trades due to the still-wide interest rate gap between Japan and the U.S.

Central Bank Notes:

• The Policy Board of the Bank of Japan maintained the short-term policy rate at 0.75% during the 15–16 June 2026 meeting, in line with market expectations, while reiterating a cautious and data-dependent approach to further policy normalization amid mixed domestic and external conditions.
• The BOJ continues to target the uncollateralized overnight call rate around 0.75%, with policymakers signaling that any move toward 1.0% will depend on sustained wage growth, inflation durability above target, stable financial conditions, and limited downside risks to growth rather than a fixed tightening schedule.
• JGB purchase tapering remains on track, with monthly bond buying continuing to moderate under the previously announced framework. The BOJ maintains flexibility to intervene or temporarily adjust purchase operations if sharp volatility emerges in the Japanese government bond market or if excessive yen fluctuations threaten financial stability.
• Japan’s economy shows moderate but uneven growth entering mid-2026, supported by resilient domestic demand, corporate investment, and recovering external activity, although weaker global manufacturing momentum and geopolitical tensions continue to weigh on the export outlook.
• Core CPI (excluding fresh food) remains near the mid-1% y/y range, while underlying inflation indicators, including core-core measures and services inflation, continue to hover around or above 2%, supported by stronger wage dynamics and pass-through effects from prior cost increases.
• Domestic inflation pressures remain supported by 2026 shunto wage settlements near 5%, labor shortages, and firm services pricing. However, easing import costs and stabilizing commodity prices are helping moderate headline inflation, while risks persist from renewed energy volatility and yen depreciation.
• Near-term real GDP growth may remain below trend, reflecting the lagged impact of tighter financial conditions and external uncertainty, but rising household incomes, accommodative real rates, and fiscal support measures are expected to gradually support consumption and business investment.
• Over the medium term, the BOJ continues to expect that labor-market tightness, wage growth, and structural productivity improvements will help sustain inflation around the 2% target, leaving room for a gradual move toward 1.0% policy rates into late-2026 or 2027, provided inflation and economic momentum remain aligned.
• The next meeting is on 30 to 31 July 2026.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

EIA Crude Oil Inventories ( 2:30 pm GMT)

What can we expect from Oil today?

Oil prices are under pressure today, as markets continue reacting to easing geopolitical tensions in the Middle East and expectations of improving crude supply. The biggest driver remains optimism around a preliminary U.S.–Iran agreement, which has raised hopes that disruptions through the strategically important Strait of Hormuz may ease, potentially allowing more oil exports back into the market. Brent crude recently slipped below $80 per barrel, while WTI moved toward the mid-$70s after a sharp selloff earlier this week.

Next 24 Hours Bias
Medium Bearish