Asia Fundamental Forecast | 06 November 2026 | IC
What happened in the U.S. session?
A sharp sell-off in technology and AI-related stocks following concerns about possible regulatory changes after the U.S. midterm elections was the main story in the U.S. session.
Although U.S. economic data remained relatively strong, particularly jobless claims and productivity, investors became more cautious. Treasury yields declined as money moved towards safer assets, supporting gold, while oil also recorded solid gains.
What does it mean for the Asia Session?
Concerns about artificial intelligence investment, political uncertainty following the U.S. midterm elections, and changing expectations for global economic growth are likely to keep investors defensive.
The Japanese yen and gold could benefit from increased safe-haven demand, while the U.S. dollar will remain sensitive to changing investor expectations ahead of the October Nonfarm Payrolls report. Meanwhile, oil prices will continue responding to developments involving Iran and potential disruptions to shipping through the Strait of Hormuz.
The Dollar Index (DXY)
Key news events today
Average Hourly Earnings m/m (1:30 pm GMT)
Non-Farm Employment Change (1:30 pm GMT)
Unemployment Rate (1:30 pm GMT)
Prelim UoM Consumer Sentiment (3:00 pm GMT)
Prelim UoM Inflation Expectations (3:00 pm GMT)
What can we expect from the DXY today?
The US dollar remains under pressure following the US midterm elections and falling Treasury yields. However, strong employment indicators and expectations of another Fed rate hike are providing some support. Today’s NFP report is the main catalyst to watch. Strong figures could strengthen the dollar, while weaker figures could push it lower.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) kept interest rates unchanged at 3.75%–4.00% at its October 27–28 meeting. The decision was approved by a 10–2 vote, following September’s 25-basis-point rate hike. Two members preferred another 25-basis-point increase.
- The labor market remains relatively stable. The Fed noted that job gains have kept pace with workforce growth and that the unemployment rate has changed little. Employment conditions remain an important factor in future policy decisions.
- Inflation remains above the Fed’s 2% target. Policymakers want more economic data to assess whether inflation is moving sustainably towards the target. Persistent inflation could increase the possibility of further rate hikes.
- The Fed upgraded its assessment of the U.S. economy from a solid pace of growth to a strong pace. Domestic spending remains resilient, productivity growth is strong, and business investment remains robust. However, geopolitical developments continue to create uncertainty.
- The Fed has kept the door open to further rate hikes if inflation remains elevated. The latest decision suggests policymakers want more evidence before making their next move. Markets are watching closely for signals about a possible rate increase in December.
- Chair Kevin Warsh continues to emphasize the importance of bringing inflation back to the 2% target. The October decision reflects a cautious approach, with the Fed waiting for more information before adjusting interest rates again.
- The Fed’s decision could influence the U.S. dollar, Treasury yields, gold, and other financial markets. Expectations of higher interest rates may support the dollar and pressure gold, while signs of easing inflation could weaken the dollar and support gold prices. Market reactions will depend on incoming economic data and expectations for future policy.
- The next meeting is scheduled for 8 to 9 December 2026.
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
Average Hourly Earnings m/m (1:30 pm GMT)
Non-Farm Employment Change (1:30 pm GMT)
Unemployment Rate (1:30 pm GMT)
Prelim UoM Consumer Sentiment (3:00 pm GMT)
Prelim UoM Inflation Expectations (3:00 pm GMT)
What can we expect from the Gold today?
Gold is trading above $4,100 as it continues recovering from last week’s decline. The main factors supporting prices are a weaker US dollar, falling Treasury yields, easing oil prices, and continued central bank demand. However, uncertainty surrounding the Federal Reserve’s December interest-rate decision remains a potential obstacle. Today’s US Non-Farm Payrolls report will be particularly important because weaker employment data could push gold higher, while stronger figures could trigger renewed selling pressure.
Next 24 Hours Bias
Medium Bullish
The Australian Dollar (AUD)
Key news events today
No major news event
What can we expect from the AUD today?
The Australian dollar remains relatively supported by the RBA’s latest interest-rate increase and improved global market sentiment. However, weaker Australian business activity, concerns about China’s economy, and uncertainty over future RBA decisions could limit further gains.
Central Bank Notes:
- The RBA raised its cash rate by 25 basis points to 4.85% on 3 November 2026, marking its fifth rate hike of the year and the highest level in 18 years. The decision was split, with six members supporting the increase and three voting to hold. Policymakers remain concerned about persistent inflation.
- Inflation remains above the RBA’s 2–3% target. Headline inflation reached 3.9% in the September quarter, while trimmed-mean inflation increased to 3.7%. Higher fuel prices and persistent domestic cost pressures continue to make inflation difficult to control.
- Australia’s unemployment rate averaged 4.6% in the September quarter, showing signs of gradual labour-market cooling. However, employment growth has remained relatively resilient, suggesting that the economy continues to support jobs despite higher borrowing costs.
- Economic growth has slowed, with weaker household consumption and softer housing conditions. Housing prices were almost 5% below their March peak by September. However, investment in data centers has provided some support to economic activity.
- Wage growth remains a concern as businesses continue to face higher labor and operating costs. The RBA expects wage growth to remain relatively firm in the near term before gradually moderating as labor-market conditions ease.
- Higher global energy prices, driven partly by ongoing Middle East tensions, are adding to Australia’s inflation pressures. The RBA expects headline inflation to reach 4.5% in the December quarter of 2026, making further monetary policy easing difficult.
- Following November’s rate increase, the RBA may adopt a more cautious approach as it assesses the impact of higher interest rates on inflation, employment, and household spending. However, further tightening remains possible if inflation stays elevated. The next meeting is scheduled for 7–8 December 2026, with the decision due on 8 December.
- The next meeting is on 8 December 2026.
Next 24 Hours Bias
Medium Bullish
The Kiwi Dollar (NZD)
Key news events today
Parliamentary Elections (All Day)
What can we expect from the NZD today?
The New Zealand dollar remains vulnerable due to rising unemployment, slowing wage growth, and uncertainty surrounding the RBNZ’s next interest rate decisions. The central bank’s decision to hold rates at 2.75%, combined with weaker employment figures, has reduced expectations of further rate hikes. Meanwhile, uncertainty ahead of Saturday’s general election is adding further pressure. Although the Kiwi has recently recovered some losses against the US dollar, its broader outlook remains fragile.
Central Bank Notes:
- The Reserve Bank of New Zealand (RBNZ) kept the Official Cash Rate (OCR) unchanged at 2.75% on 28 October 2026. The decision was close, with four members voting to hold rates and three supporting a hike. The bank chose to assess incoming economic data before making further changes.
- Annual inflation eased from 4.1% in June to 3.7% in September 2026, but it remains above the RBNZ’s 1–3% target range. The bank expects inflation could rise to 4.4% by the end of the year, partly due to higher fuel costs.
- Ongoing disruptions in global energy markets are increasing fuel-price uncertainty. Higher energy costs could push up transportation and production expenses, keeping inflation elevated. A weaker New Zealand dollar is also adding to near-term inflation pressures.
- Although the RBNZ held rates in October, the close vote suggests further increases remain possible. Policymakers will monitor inflation, domestic price pressures, and economic activity before deciding whether additional tightening is necessary. The next decision will depend on incoming data rather than a fixed plan.
- New Zealand’s economy continues to recover, but growth remains uneven. Strong export performance and resilient demand from trading partners are supporting economic activity, while weak household spending and housing-market conditions continue to limit the recovery.
- Households remain under pressure from the cost of living and uncertain economic conditions. Weak spending and subdued housing activity could slow the recovery, making it important for the RBNZ to balance inflation control with economic growth.
- New Zealand’s labor market remains weak, with unemployment at 5.6% in the June 2026 quarter. Subdued wage growth is helping limit some inflation pressures, but a weak job market remains a concern for policymakers. The next unemployment report is scheduled for 4 November 2026.
- The RBNZ’s next monetary policy decision is scheduled for 9 December 2026. Traders will closely monitor inflation, employment data, fuel prices, and the bank’s guidance for clues about whether interest rates could rise further
- The next meeting is on 9 December 2026.
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
Key news events today
BOJ Gov Ueda Speaks (4:00 pm GMT)
What can we expect from the JPY today?
The Japanese yen is showing signs of strength after the Bank of Japan’s meeting minutes increased expectations of another interest-rate hike in December. USD/JPY has pulled back from near 159.00 towards 157.60. However, expectations of higher U.S. interest rates could continue supporting the dollar and limit yen gains. Traders should pay close attention to Governor Ueda’s comments and Friday’s U.S. employment report.
Central Bank Notes:
- The BOJ maintained its policy rate at 1.25% at its October 29–30 meeting. The decision was passed by an 8–1 vote, with one member favoring a 25-basis-point hike to 1.50%.
- The BOJ indicated that underlying inflation has reached levels consistent with its 2% target, although it still needs to ensure inflation remains stable around that level.
- Governor Kazuo Ueda maintained a cautious but increasingly hawkish stance, signalling that further interest-rate hikes remain possible as inflation risks increase.
- The bank revised its inflation outlook higher, highlighting rising energy and raw-material costs as potential sources of additional price pressure.
- Japan’s economy continues to recover moderately, while domestic demand and business conditions remain important factors in the BOJ’s policy decisions.
- Yen weakness remains a major concern because it increases import costs and adds to inflationary pressure. The BOJ continues to monitor exchange-rate movements closely.
- The BOJ is also continuing its balance-sheet normalization, including the gradual reduction of Japanese government bond purchases and adjustments to its ETF disposal plans.
- The BOJ remains on a gradual tightening path. Further rate increases will depend on inflation, wage growth, economic conditions, and financial-market developments. Markets are watching December for a possible rate hike.
- The next meeting is on 17-18 December 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 prices recovered on Thursday after suffering a sharp decline earlier in the week. Renewed tanker attacks in the Middle East and uncertainty surrounding US-Iran negotiations have increased concerns about possible supply disruptions. OPEC+ also decided to keep its December production levels unchanged, providing some support to prices. However, concerns about weak global demand and a possible oil supply surplus could limit further gains.
Next 24 Hours Bias
Medium Bearish
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