IC – Asia Fundamental Forecast | 29 September 2026
What happened in the U.S. session?
The U.S. session was dominated by the combination of geopolitical risk, rising oil prices, and higher Treasury yields. The rejection of an Iranian peace proposal pushed Brent above $107 and renewed concerns about energy-driven inflation, which in turn strengthened expectations for further Fed tightening. The resulting rise in yields and firmer dollar weighed heavily on gold, stocks, and major currency pairs, while crude oil was the major beneficiary.
For the next session, traders will be watching Australian RBA developments, Canadian GDP, U.S. Consumer Confidence, and JOLTS Job Openings with particular attention on whether the U.S. labor data reinforces or challenges current expectations for another Fed rate hike.
What does it mean for the Asia Session?
Tuesday’s Asian session is likely to be dominated by the RBA decision and its guidance. Traders should watch whether the RBA delivers the expected move to 4.60% and, more importantly, what Governor Bullock signals about future policy. At the same time, China’s weak equity performance, US-China trade/technology tensions, elevated oil prices, and geopolitical developments around Iran and the Strait of Hormuz could influence broader risk sentiment.
The Dollar Index (DXY)
Key news events today
CB Consumer Confidence (2:00 pm GMT)
JOLTS Job Openings (2:00 pm GMT)
What can we expect from the DXY today?
The U.S. dollar is on a firm footing, supported by higher Treasury yields, expectations for further Federal Reserve tightening, and renewed inflation concerns linked to elevated oil prices and ongoing Middle East tensions. The immediate focus will be on JOLTS job openings, consumer confidence, and comments from Fed officials, as traders assess the strength of the U.S. labor market and the outlook for monetary policy. The key USD catalysts remain PCE inflation and Friday’s Nonfarm Payrolls report.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) raised the federal funds target range by 25 basis points to 3.75%–4.00% at its September 15–16, 2026, meeting. The decision was approved unanimously by a 12–0 vote, marking a shift from the July meeting, when rates were held at 3.50%–3.75%. The Fed said the move was intended to support its dual mandate and promote a more timely return of inflation toward its 2% objective.
- The labor market remains relatively resilient. The September FOMC statement said job gains have kept pace with workforce growth and that the unemployment rate has changed little. The Fed continues to monitor employment conditions closely alongside inflation when determining the appropriate path for monetary policy.
- Inflation remains above the Federal Reserve’s 2% target and continues to be a key policy concern. The September decision explicitly noted that inflation remains elevated. The latest projections put median headline PCE inflation at 3.7% for 2026, before falling to 2.3% in 2027, 2.1% in 2028, and 2.0% in 2029. Core PCE inflation is projected at 3.4% in 2026, declining to 2.5% in 2027 and 2.2% in 2028.
- Economic activity continues to expand at a solid pace. The Fed highlighted resilient domestic spending, strong productivity growth, and robust capital investment, although uncertainty remains elevated partly because of geopolitical developments. The September projections raised the median 2026 GDP-growth forecast to 2.3%, compared with 2.2% in the June projections.
- The September projections show a higher expected policy-rate path than in June. The median projection for the federal funds rate is now 4.1% at the end of 2026, compared with 3.8% in the June projections. The median is projected at 4.1% in 2027, 3.9% in 2028, and 3.6% in 2029. This indicates that policymakers’ projected rate path remains relatively restrictive while inflation is expected to move gradually toward the target.
- Chair Kevin Warsh continues to emphasize the importance of returning inflation to 2%. Ahead of the September meeting, Warsh indicated that the Fed would have further work to do if policymakers could not gain sufficient confidence that inflation was moving toward the 2% objective. The September decision subsequently delivered a 25-basis-point hike, while the Committee continued to emphasize its assessment of incoming economic data and risks.
- The September economic projections show a more balanced growth outlook but continued inflation risks. The median unemployment forecast is 4.1% for 2026 and 2027, while the Fed projects GDP growth of 2.3% in 2026 and 2.4% in 2027. At the same time, PCE inflation is expected to remain substantially above target through 2026 before moving closer to 2% over subsequent years.
- The next meeting is scheduled for 27 to 28 October 2026.
Next 24 Hours Bias
Medium Bullish
Gold (XAU)
Key news events today
CB Consumer Confidence (2:00 pm GMT)
JOLTS Job Openings (2:00 pm GMT)
What can we expect from the Gold today?
Gold is under heavy bearish pressure today after falling around 4% on Monday and reaching approximately $4,110/oz, its lowest level since early August. The main drivers are surging U.S. Treasury yields, a firmer U.S. dollar, and increasing expectations for additional Federal Reserve rate hikes, which raise the opportunity cost of holding non-yielding gold.
Next 24 Hours Bias
Medium Bearish
The Australian Dollar (AUD)
Key news events today
Cash Rate (4:30 am GMT)
RBA Rate Statement (4:30 am GMT)
What can we expect from the AUD today?
The Australian dollar is entering a major event-risk window, with the RBA widely expected to raise interest rates by 25 basis points to 4.60% on September 29. With the hike largely priced into markets, the RBA’s statement and Governor Michele Bullock’s comments are likely to be more important for the AUD than the rate decision itself. A signal that further tightening may be necessary could provide additional support for the Aussie, while an indication that this could be the final hike may limit the currency’s upside reaction. At the same time, elevated U.S. Treasury yields and a relatively strong U.S. dollar continue to create headwinds for AUD/USD.
Central Bank Notes:
- The Reserve Bank of Australia (RBA) is expected to maintain a cautious, data-dependent policy stance heading into its September 2026 Monetary Policy Meeting. The cash rate target remains at 4.35%, following three increases earlier in 2026. The RBA has indicated that monetary policy needs to remain sufficiently restrictive to bring inflation back toward the 2–3% target while allowing the Board to assess the effects of previous tightening on household demand, employment, and economic activity.
- Inflation remains the central issue for the September meeting, although headline price pressures have continued to moderate. Australia’s CPI rose 3.8% year-on-year in June 2026, down from 4.0% in May, while trimmed-mean inflation remained at 3.6%. This suggests that underlying inflation is proving more persistent than headline inflation and remains above the RBA’s 2–3% target band. Housing costs continue to be an important source of inflationary pressure, while the end of some electricity rebates has also contributed significantly to household costs.
- The August and September inflation data will be particularly important for determining the RBA’s next move. The ABS is scheduled to release the July 2026 CPI on 26 August, giving policymakers a fresh inflation reading before the September meeting. The data will help determine whether the recent moderation in headline inflation is becoming more broad-based or whether services and domestic cost pressures remain stubborn.
- The labor market remains relatively resilient, but there are early signs of moderation. Australia’s unemployment rate was 4.4% in June, while employment increased by approximately 76,300 people and the participation rate rose to 67.0%. The increase in employment gives the RBA room to maintain a restrictive policy stance, although rising unemployment or a significant decline in employment growth could strengthen the case for eventually easing monetary policy.
- Wage growth will remain an important indicator for the September decision. The latest available Wage Price Index showed wages increasing 0.8% quarter-on-quarter and 3.3% year-on-year in the March quarter. The June-quarter wage data is scheduled for release on 19 August 2026, meaning the RBA will have this information available before its September meeting. A stronger-than-expected wage result could reinforce concerns about persistent domestic inflation, while softer wage growth would support the argument that inflation is gradually returning toward target.
- Household demand and economic growth will remain closely monitored. Higher borrowing costs continue to place pressure on mortgage holders and discretionary household spending. At the same time, improving real incomes and easing headline inflation could gradually support consumption later in the year. The RBA will therefore need to balance the risk of keeping rates restrictive for too long against the risk of easing policy before underlying inflation has been sufficiently contained.
- Global economic and commodity-market conditions remain an important risk for Australia. Developments in energy prices, geopolitical tensions, and China’s economic performance could have significant implications for Australia’s inflation and export outlook. A renewed increase in energy prices could raise Australia’s inflation outlook, while weaker prices could weigh on commodity exports, business activity, and overall economic growth.
- Financial markets are likely to remain highly sensitive to incoming inflation and employment data. With the cash rate already at 4.35%, markets will closely assess whether the RBA is approaching the end of its tightening cycle or whether another increase could become necessary. A sustained decline in underlying inflation and weaker domestic demand would strengthen expectations for eventual rate cuts, while persistent services inflation, strong wages or renewed energy-price pressures could keep the possibility of another hike alive.
- The next meeting is on 28-29 September 2026.
Next 24 Hours Bias
Medium Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from the NZD today?
The RBNZ raised its Official Cash Rate by 25 bps to 2.75% earlier this month, but its guidance pointed to a slower pace of further tightening than markets had expected, limiting support for the NZD from higher interest rates. Meanwhile, higher global oil prices and elevated U.S. Treasury yields are creating a challenging environment for the Kiwi. The RBNZ has warned that persistent energy-price increases could push near-term inflation higher, while stronger U.S. yields and expectations of a more hawkish Fed continue to support the U.S. dollar.
Central Bank Notes:
- The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points to 2.75% at its 2 September 2026 Monetary Policy Statement meeting. The decision was reached by consensus, marking another step in the bank’s tightening cycle as policymakers seek to bring inflation sustainably back toward the 2% midpoint.
- Inflation remains the key reason behind the RBNZ’s tightening stance. Annual consumer inflation increased to 4.1% in the June 2026 quarter, driven largely by higher fuel prices associated with the Middle East conflict. The RBNZ expects inflation to remain above 3% for the remainder of 2026 before returning to the 1–3% target range next year and moving toward the 2% midpoint.
- Energy prices and geopolitical developments remain an important upside risk to inflation. Higher petrol and diesel prices have increased transportation and production costs, feeding into prices for goods and services such as food and air travel. The RBNZ remains concerned that renewed increases in energy prices could make inflation more persistent than currently expected.
- The RBNZ indicated that further OCR increases may still be required this year, but policy is not on a predetermined path. Future decisions will depend on the balance of risks to medium-term inflation, including inflation expectations, domestic price pressures, economic activity, and the response of households and businesses to tighter financial conditions.
- New Zealand’s economic recovery appears to have resumed, although growth remains uneven. Economic activity was lacklustre during the June quarter as higher fuel costs reduced household purchasing power. However, stronger export prices and resilient demand from trading partners are supporting income growth and investment, particularly in export-oriented sectors.
- Household demand and the housing market remain areas of weakness. Weak income growth, job insecurity, and relatively flat house prices continue to weigh on household spending and residential investment, particularly in Auckland and Wellington. The RBNZ nevertheless expects the recovery to strengthen gradually as inflation declines and purchasing power improves.
- The labor market remains relatively soft, but the Bank expects conditions to improve as economic activity strengthens. High unemployment and subdued household demand remain a concern, but stronger economic growth should gradually encourage businesses to increase hiring. This creates a delicate balance for the RBNZ between containing inflation and avoiding unnecessary weakness in employment and output.
- The RBNZ continues to see strong export performance as an important support for the economy. New Zealand’s agricultural and other export sectors are benefiting from resilient global demand and strong commodity prices, helping offset weakness in domestic consumption and residential investment.
- The next meeting is on 28 October 2026.
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
Key news events today
No major news event
What can we expect from the JPY today?
The Japanese yen enters September 29, caught between opposing forces. On one side, renewed warnings from Japanese officials and continued Japan-U.S. cooperation over excessive yen weakness are increasing intervention risk, while the BOJ’s latest communications are reinforcing expectations of further monetary tightening. On the other side, strong U.S. yields, expectations of another Federal Reserve rate hike, and elevated oil prices are supporting the dollar and keeping USD/JPY near 158.
Central Bank Notes:
- The BOJ raised its policy rate by 25 basis points to 1.25% at its September 17–18 meeting, the highest level in 31 years. The decision passed 7–2.
- The BOJ said underlying inflation remains firm and is increasingly consistent with its 2% price-stability target, supported by wage growth and services prices.
- Further rate hikes remain possible, but the BOJ will continue to assess wage growth, inflation, economic activity, and financial-market conditions before making additional adjustments.
- The Bank continues its gradual reduction of Japanese Government Bond purchases while retaining flexibility to respond if market volatility becomes excessive.
- Japan’s economy continues to expand moderately, supported by domestic demand and business investment, although global trade uncertainty, geopolitical risks, and higher energy costs remain important risks.
- Yen weakness remains a key concern, as depreciation can increase imported inflation. The BOJ is closely monitoring exchange-rate movements and their impact on prices and financial conditions.
- Governor Kazuo Ueda signalled that the September hike reflects growing confidence that inflation is becoming more sustainable, while the two dissenting members preferred to wait before tightening further.
- Looking ahead: The BOJ remains on a gradual normalization path. Future hikes will depend mainly on inflation, wages, domestic demand, and financial conditions rather than a fixed timetable.
- The next meeting is on 29 to 30 October 2026.
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No major news event
What can we expect from the Oil today?
Oil markets remain highly sensitive to developments around the U.S.–Iran negotiations, Strait of Hormuz shipping activity, Saudi oil exports, and the escalating situation involving Yemen and the Houthis. Recent reports indicate that Saudi Arabia has resumed operations on its East-West pipeline and was preparing to restore exports through Yanbu, providing some relief to supply concerns. At the same time, continued Houthi advances near the Red Sea and Bab al-Mandeb are creating an additional risk to regional energy flows.
Next 24 Hours Bias
Medium Bearish
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