{"id":81738,"date":"2026-07-01T17:00:12","date_gmt":"2026-07-01T07:00:12","guid":{"rendered":"https:\/\/www.icmarkets.com.au\/blog\/?p=81738"},"modified":"2026-07-01T17:00:14","modified_gmt":"2026-07-01T07:00:14","slug":"ic-markets-asia-fundamental-forecast-01-july-2026","status":"publish","type":"post","link":"https:\/\/www.icmarkets.com.au\/blog\/ic-markets-asia-fundamental-forecast-01-july-2026\/","title":{"rendered":"IC Markets &#8211; Asia Fundamental Forecast | 01 July 2026"},"content":{"rendered":"\n<p><strong>IC Markets &#8211; Asia Fundamental Forecast | 01 July 2026<\/strong><\/p>\n\n\n\n<p><strong>What happened in the U.S. session?<\/strong><strong><br \/><\/strong><strong><br \/><\/strong>Financial markets were driven by a combination of stronger-than-expected U.S. macroeconomic data, easing geopolitical concerns in the Middle East, and quarter-end portfolio positioning. Risk sentiment improved as investors continued to unwind safe-haven trades following signs that tensions surrounding Iran had eased, while U.S. economic releases reinforced expectations that the Federal Reserve may need to keep monetary policy restrictive for longer. Treasury yields moved higher, Wall Street extended its rally, the U.S. dollar remained well supported overall, gold stayed under pressure, and crude oil traded around pre-conflict levels after the sharp selloff seen over the previous week.<br \/><br \/><strong>What does it mean for the Asia Session?<\/strong><br \/><br \/>Asian traders head into Wednesday&#8217;s session with attention firmly focused on a combination of key economic data, central bank signals, and geopolitical developments. China&#8217;s June PMI figures will be the primary regional release, offering fresh insight into the strength of manufacturing and services activity at the end of the second quarter. Weaker-than-expected data could weigh on commodity-linked currencies such as the Australian and New Zealand dollars, while stronger readings may improve risk sentiment across Asian equities.<br \/>\u200b<br \/><strong>The Dollar Index (DXY)<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><\/p>\n\n\n\n<p>ADP Non-Farm Employment Change (12:15 pm GMT)<br \/><br \/>Fed Chairman Warsh Speaks (1:00 pm GMT)<br \/><br \/>ISM Manufacturing PMI (2:00 pm GMT)<br \/><br \/>ISM Manufacturing Prices (2:00 pm GMT)<br \/><br \/><strong>What can we expect from DXY today?<\/strong><strong><br \/><\/strong><strong><br \/><\/strong>The U.S. dollar is beginning Wednesday, 1 July 2026, on a firm footing as markets continue to price in the possibility of tighter monetary policy from the Federal Reserve following resilient U.S. economic data and persistent inflation. The Dollar Index recently climbed to around 101, marking its second consecutive monthly gain, while rising U.S. Treasury yields continue to support demand for the greenback. The dollar&#8217;s strength has pushed the Japanese yen to a 40-year low, fueling speculation of intervention by Japanese authorities, and has also weighed on commodities such as gold.<\/p>\n\n\n\n<p><br \/><strong>Central Bank Notes:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Federal Open Market Committee (FOMC) left the federal funds rate unchanged at 3.50%\u20133.75% at its June 16\u201317, 2026, meeting, marking another pause in the policy cycle. Under new Fed Chair Kevin Warsh, policymakers signaled a more cautious and hawkish stance as inflation remains above target despite moderating energy prices.<\/li>\n\n\n\n<li>The Committee remains committed to achieving maximum employment and returning inflation to its 2% objective. Labor market conditions have remained relatively stable, with job gains continuing at a moderate pace and the unemployment rate projected to remain near 4.4% through 2026.<\/li>\n\n\n\n<li>Inflation continues to be the primary concern for policymakers. Headline inflation remains elevated, supported by earlier energy-related price pressures and persistent services inflation. The June projections showed higher inflation forecasts than previously expected, leading several officials to favor keeping policy restrictive for longer.<\/li>\n\n\n\n<li>Economic activity continues to expand at a moderate pace. Productivity growth, capital investment, and AI-related spending remain supportive of growth, while consumer spending and housing activity show signs of slowing compared with late 2025 and early 2026.<\/li>\n\n\n\n<li>The June 2026 Summary of Economic Projections (SEP) revealed a more divided Committee. Nine officials projected at least one rate hike during 2026, while others expected rates to remain unchanged or eventually decline. The median outlook shifted toward a higher-for-longer policy path compared with earlier projections.<\/li>\n\n\n\n<li>The Committee emphasized a data-dependent approach and noted that future decisions will depend on incoming inflation, employment, and economic growth data. Officials acknowledged that geopolitical developments and energy markets remain important upside risks to inflation.<\/li>\n\n\n\n<li>The FOMC continues its balance sheet normalization program, maintaining Treasury runoff caps at $5 billion per month and agency mortgage-backed securities (MBS) runoff caps at $35 billion per month, while ensuring ample reserves remain in the banking system.<\/li>\n\n\n\n<li>The next meeting is scheduled for 28 to 29 July 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><\/p>\n\n\n\n<p>Medium Bullish<\/p>\n\n\n\n<p><strong>Gold (XAU)<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><br \/><br \/>ADP Non-Farm Employment Change (12:15 pm GMT)<\/p>\n\n\n\n<p>Fed Chairman Warsh Speaks (1:00 pm GMT)<\/p>\n\n\n\n<p>ISM Manufacturing PMI (2:00 pm GMT)<\/p>\n\n\n\n<p>ISM Manufacturing Prices (2:00 pm GMT)<\/p>\n\n\n\n<p><strong>What can we expect from Gold today?<\/strong><\/p>\n\n\n\n<p>Gold remains under pressure at the start of Wednesday, as investors continue to respond to the U.S. Federal Reserve&#8217;s hawkish outlook and a stronger U.S. dollar. Spot gold is trading near the $4,000\/oz level after suffering its largest quarterly decline in more than 13 years, with expectations growing that the Fed could keep interest rates elevated or even raise them again to combat persistent inflation. Higher Treasury yields have reduced demand for the non-yielding precious metal, while improving risk sentiment in global equity markets has further dampened safe-haven flows into gold.<br \/><br \/><strong>Next 24 Hours Bias<\/strong><br \/>Weak Bearish<\/p>\n\n\n\n<p><strong>The Australian Dollar (AUD)<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><\/p>\n\n\n\n<p>No major news event<\/p>\n\n\n\n<p><strong>What can we expect from AUD today?<\/strong><\/p>\n\n\n\n<p>The Australian dollar (AUD) remains under pressure at the start as broad U.S. dollar strength and expectations of relatively higher U.S. interest rates continue to weigh on the currency. AUD\/USD has slipped to around a three-month low after investors reacted to the latest minutes from the Reserve Bank of Australia, which signaled policymakers remain cautious about the inflation outlook while offering no clear indication of further near-term rate hikes.<br \/><br \/><strong>Central Bank Notes:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Reserve Bank of Australia (RBA) kept its cash rate unchanged at 4.35% at the 15\u201316 June 2026 meeting, maintaining a restrictive policy stance as policymakers assessed whether the May rate increase was sufficient to contain renewed inflation pressures.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>Inflation remains elevated, with headline CPI still above the RBA\u2019s 2\u20133% 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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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\u2014particularly China\u2014creates downside risks for Australian exports.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>The RBA continues to stress a \u201cdata-dependent\u201d 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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>The next meeting is on 6 to 7 July 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><\/p>\n\n\n\n<p>Medium Bearish<\/p>\n\n\n\n<p><strong>The Kiwi Dollar (NZD)<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><br \/><br \/>No major news event<\/p>\n\n\n\n<p><strong>What can we expect from NZD today?<\/strong><\/p>\n\n\n\n<p>The New Zealand dollar (NZD) is beginning Wednesday, 1 July 2026, on a cautious footing after a volatile end to June. While the currency recovered modestly from recent lows as the U.S. dollar eased slightly, overall sentiment remains fragile. Markets continue to weigh the possibility of further U.S. Federal Reserve tightening against expectations that the Reserve Bank of New Zealand will leave its Official Cash Rate unchanged at its 8 July policy review, despite having signaled that additional rate hikes may be needed later this year if inflation remains elevated.<\/p>\n\n\n\n<p><br \/><strong>Central Bank Notes:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Reserve Bank of New Zealand&#8217;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\u2014a 3-3 split requiring Governor Anna Breman&#8217;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.<\/li>\n\n\n\n<li>While the OCR remained unchanged, the RBNZ issued its most hawkish guidance since the cutting cycle ended, stating the OCR will &#8220;likely need to rise sooner and by more than previously envisioned.&#8221; Market pricing now indicates a 72\u201373% probability of a rate hike at the next meeting on 8 July 2026, with swaps pricing in roughly 16bps of tightening.<\/li>\n\n\n\n<li>Annual CPI inflation remained at 3.1% in Q1 2026 (above the 1\u20133% target band) for two consecutive quarters. The RBNZ now forecasts inflation to peak at 4.3% in the September 2026 quarter\u2014driven by Middle East oil shocks\u2014before returning to the 2% target midpoint by mid-2027.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>Markets now expect the first hike in this tightening cycle, with the MPC&#8217;s internal division suggesting any future decision may again be contentious. Policy remains below the ~3% neutral rate, but the shift from &#8220;wait-and-see&#8221; to &#8220;preemptive tightening&#8221; is now clear.<\/li>\n\n\n\n<li>The next meeting is on 8 July 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><\/p>\n\n\n\n<p>Strong Bearish<\/p>\n\n\n\n<p><strong>The Japanese Yen (JPY)<\/strong><strong><br \/><\/strong><strong><br \/><\/strong><strong>Key news events today<\/strong><\/p>\n\n\n\n<p>No major news event<\/p>\n\n\n\n<p><strong>What can we expect from JPY today?<\/strong><strong><br \/><\/strong><strong><br \/><\/strong>The Japanese yen remains under heavy pressure at the start of Wednesday, after falling to its weakest level against the U.S. dollar since 1986. The primary driver continues to be the wide interest rate differential between the U.S. Federal Reserve and the Bank of Japan, with markets increasingly pricing in the possibility of further U.S. rate hikes while the BOJ is expected to tighten policy only gradually. Japanese officials have reiterated that they are prepared to respond to excessive currency moves, fueling speculation that foreign exchange intervention could occur if USD\/JPY extends toward the 165 level or if volatility accelerates.<\/p>\n\n\n\n<p><br \/><strong>Central Bank Notes:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Policy Board of the Bank of Japan maintained the short-term policy rate at 0.75% at the 15\u201316 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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>Japan\u2019s economy shows moderate but uneven growth heading into 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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>The next meeting is on 30 to 31 July 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><\/p>\n\n\n\n<p>Weak Bearish<\/p>\n\n\n\n<p><strong>Oil<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><br \/><br \/>EIA Crude Oil Inventories (2:30 pm GMT)<\/p>\n\n\n\n<p><strong>What can we expect from Oil today?<\/strong><\/p>\n\n\n\n<p>Oil prices remain under pressure at the start of July as traders continue to unwind the geopolitical risk premium that had driven prices sharply higher earlier this year. The faster-than-expected normalization of shipping through the Strait of Hormuz, recovering Middle East crude exports, and expectations of increased OPEC+ supply have shifted market sentiment from fears of supply shortages to concerns about a potential oversupply in the second half of 2026. Brent crude is trading around the low-$70s per barrel, while WTI remains near $70\/bbl, with analysts from several major banks recently revising their price forecasts lower.<br \/><br \/><strong>Next 24 Hours Bias<\/strong><strong><br \/><\/strong>Weak Bearish<\/p>\n","protected":false},"excerpt":{"rendered":"<p>IC Markets &#8211; Asia Fundamental Forecast | 01 July 2026 What [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":79410,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[196,215,339],"tags":[],"class_list":["post-81738","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fundamental-analysis","category-market-analysis","category-recent-posts"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/posts\/81738","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/comments?post=81738"}],"version-history":[{"count":1,"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/posts\/81738\/revisions"}],"predecessor-version":[{"id":81739,"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/posts\/81738\/revisions\/81739"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/media\/79410"}],"wp:attachment":[{"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/media?parent=81738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/categories?post=81738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.icmarkets.com.au\/blog\/wp-json\/wp\/v2\/tags?post=81738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}