IC Markets – Asia Fundamental Forecast | 25 March 2026
What happened in the U.S. session?
U.S. import/export prices ticked higher modestly while the current account deficit narrowed, offering some relief on inflation but highlighting persistent trade frictions amid tariff reversals and global tensions; this spurred a weaker dollar, gold rally, and yield softening, with equities mixed and oil choppy as the primary movers.
What does it mean for the Asia Session?
US-Iran developments for volatility in oil, equities, and FX, as Trump’s de-escalation comments fuel regional rebounds but skepticism persists amid fragile peace hopes; oil’s plunge eases inflation fears, supporting risk assets like Kospi and Nikkei, while gold and USD dynamics hinge on sustained dollar strength.
The Dollar Index (DXY)
Key news events today
President Trump Speaks (11:20 pm GMT)
What can we expect from DXY today?
The US Dollar edged higher to near 99.40 on the DXY, supported by safe-haven flows from the protracted Iran conflict—marked by denied talks, potential Gulf allies’ involvement, and persistent oil-driven inflation pressures—despite trader doubts on de-escalation and no imminent Fed easing.
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
Weak Bullish
Gold (XAU)
Key news events today
President Trump Speaks (11:20 pm GMT)
What can we expect from Gold today?
Gold prices showed modest gains today, Wednesday, March 25, 2026, amid ongoing market consolidation and safe-haven demand pressures. Spot gold rose to around $4,594.79 per troy ounce, up 2.72% from the prior session, though it remains down over 11% in the past month after peaking near $5,600 earlier this year.
Next 24 Hours Bias
Weak Bullish
The Australian Dollar (AUD)
Key news events today
CPI m/m (12:30 am GMT)
CPI y/y (12:30 am GMT)
Trimmed Mean CPI m/m (12:30 am GMT)
What can we expect from AUD today?
The Australian dollar is trading cautiously today,, as markets await the release of Australia’s February CPI inflation data, which is due later in the day and is a key input for the RBA’s next policy decision. Recent headlines show AUD/USD drifting around the 0.696–0.700 zone, down slightly on the day after a broader pull‑back from intramonth highs near 0.718 in early March
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 Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from NZD today?
The New Zealand Dollar has traded in a volatile range of approximately 0.582-0.594 against the USD through mid-to-late March 2026, undermined by Middle East conflicts fueling oil-driven inflation fears and risk-off sentiment, yet showing resilience post-disappointing Q4 GDP data on March 18 due to USD pullbacks and RBNZ policy stability expectations.
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
Weak Bearish
The Japanese Yen (JPY)
Key news events today
No major news event
What can we expect from JPY today?
The USD/JPY pair hovered near 158.69-159.09, reflecting a slight daily dip but continued monthly weakening of the Yen, driven by steady BOJ policy, oil recovery pressuring imports, and technical patterns forecasting a near-term correction lower unless resistance at 160.45 breaks. Over the past 12 months, the Yen has declined 6.13%, with expectations for it to reach 154.01 in a year.
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
Medium Bearish
Oil
Key news events today
EIA Crude Oil Inventories ( 2:30 pm GMT)
What can we expect from Oil today?
Oil prices remain elevated today, amid escalating Middle East tensions, particularly the US/Israel-Iran conflict, disrupting supplies and driving a geopolitical risk premium of about $20 per barrel. Brent crude recently surged past $103 per barrel on March 24, up over 3%, while WTI followed suit, with earlier sessions holding steady above $107 as markets brace for potential Hormuz Strait issues following President Trump’s 48-hour ultimatum to Iran.
Next 24 Hours Bias
Strong Bullish
