IC – Asia Fundamental Forecast | 03 August 2026

by | Aug 3, 2026

IC – Asia Fundamental Forecast | 03 August 2026

What happened in the U.S. session?

The U.S. session overnight was characterized by a risk-on tone in equities following strong earnings from major technology companies, while investors remained cautious ahead of this week’s important economic releases, particularly the ISM Manufacturing PMI and July employment report. Treasury yields stayed elevated as markets continued to weigh the Federal Reserve’s policy outlook, supporting the U.S. dollar and limiting gains in gold. Crude oil prices remained volatile due to ongoing geopolitical tensions involving Iran and concerns over global supply, although prices eased from recent highs as traders locked in profits.

What does it mean for the Asia Session?

During the Asian session, market sentiment will be driven by risk appetite, developments in China, and movements in oil prices, while attention later shifts to the U.S. ISM Manufacturing PMI and ISM Prices Index. Strong U.S. manufacturing data would likely strengthen the dollar and weigh on gold, whereas softer figures could boost precious metals and risk assets. Overall, traders should expect volatility to increase as markets begin pricing in the week’s major central bank and employment-related events.
​
The Dollar Index (DXY)

Key news events today

ISM Manufacturing PMI (2:00 pm GMT)

ISM Manufacturing Prices (2:00 pm GMT)

What can we expect from DXY today?

The U.S. dollar is expected to experience heightened volatility today as traders await the release of the ISM Manufacturing PMI and Manufacturing Prices data. Markets are looking for a modest improvement in manufacturing activity alongside easing input price pressures. A stronger PMI would reinforce expectations that the U.S. economy remains robust and could support the dollar by sustaining the Federal Reserve’s cautious hawkish stance. A weaker-than-expected reading, however, would likely pressure the dollar ahead of this week’s crucial labor market data, particularly Friday’s Non-Farm Payrolls report, which remains the key event for determining the next major move in the greenback.

Central Bank Notes:

  • The Federal Open Market Committee (FOMC) kept the federal funds rate unchanged at 3.50%–3.75% at its July 28–29, 2026, meeting, marking the fifth consecutive meeting without a policy change. The Committee voted 9–3 to maintain rates, with three members dissenting in favor of a 25-basis-point rate hike, highlighting growing concern among some policymakers that inflation remains too high.
  • The Committee reaffirmed its dual mandate of maximum employment and price stability. Officials noted that the labor market remains resilient, with job gains broadly keeping pace with labor force growth and the unemployment rate remaining relatively stable. The FOMC continues to view employment conditions as consistent with a healthy economy while remaining vigilant for signs of labor market weakening.
  • Inflation remains the Committee’s primary concern. While some recent inflation data have shown moderation, overall price pressures remain above the Fed’s 2% target. Policymakers emphasized that elevated inflation continues to be driven in part by higher energy prices and persistent supply-side pressures, leading the Committee to maintain a restrictive monetary policy stance.
  • Economic activity continues to expand at a solid pace despite elevated uncertainty. Strong productivity growth, business investment, and continued spending related to artificial intelligence remain supportive of economic growth. However, the FOMC acknowledged that geopolitical tensions, particularly developments affecting global energy markets, continue to pose risks to both inflation and the broader economic outlook.
  • The July meeting highlighted increasing divisions within the Committee. Three policymakers—Beth Hammack, Neel Kashkari, and Lorie Logan—voted against the majority, preferring an immediate rate increase. This unusually large number of dissents reflects growing concern among some officials that inflation could remain persistent and may require additional policy tightening if progress stalls.
  • Chair Kevin Warsh reiterated that future policy decisions will remain strictly data-dependent. He avoided providing explicit forward guidance, emphasizing that upcoming decisions will depend on incoming inflation, employment, and growth data. Warsh also stressed that the Committee remains fully committed to returning inflation to its 2% objective and is prepared to act if inflationary pressures intensify.
  • The FOMC continues its balance sheet normalization program without changes. The Federal Reserve will maintain Treasury runoff caps at $5 billion per month and agency mortgage-backed securities (MBS) runoff caps at $35 billion per month, while continuing to ensure ample reserves remain available within the banking system.
  • The next meeting is scheduled for 15 to 16 September 2026.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

ISM Manufacturing PMI (2:00 pm GMT)

ISM Manufacturing Prices (2:00 pm GMT)

What can we expect from Gold today?

Gold is likely to trade cautiously today ahead of the U.S. ISM Manufacturing data. The metal remains caught between safe-haven demand from geopolitical risks and pressure from expectations that the Federal Reserve could keep interest rates higher for longer. A weaker-than-expected PMI and softer inflation components would likely be bullish for gold, while stronger U.S. economic data would favor the dollar and could trigger further selling pressure in XAU/USD.

Next 24 Hours Bias
Strong Bearish

The Australian Dollar (AUD)

Key news events today

No major news event

What can we expect from AUD today?

The Australian dollar (AUD) is beginning Monday on a cautious footing after last week’s softer-than-expected Australian inflation data significantly reduced expectations of another Reserve Bank of Australia (RBA) interest rate hike in the near term. While the easing inflation figures have relieved pressure on households, they have also weakened the interest-rate support that had previously underpinned the AUD. Markets are now looking ahead to the RBA’s next policy meeting for guidance on whether policymakers maintain a hawkish bias or acknowledge that inflation is cooling faster than expected.

Central Bank Notes:

  • The Reserve Bank of New Zealand’s Monetary Policy Committee (MPC) raised the Official Cash Rate (OCR) by 25 basis points to 2.50% at its 8 July 2026 Monetary Policy Review, marking the first rate increase of the current tightening cycle. Unlike the split decision in May, the Committee reached a consensus that reducing monetary stimulus was appropriate to return inflation to target.
  • Although global oil prices have fallen following the partial reopening of the Strait of Hormuz, the RBNZ warned that inflation remains above its 1–3% target range and that lingering energy-related cost pressures continue to pose upside risks. The Bank reiterated that further OCR increases are likely, although the timing will remain dependent on incoming economic data.
  • The RBNZ now expects headline inflation to have peaked at 3.9% in Q2 2026, lower than the 4.3% peak projected in May, reflecting weaker oil prices. Inflation is forecast to ease to around 3.3% in Q3 2026 before gradually returning to the 2% midpoint by mid-2027, while underlying domestic inflation remains persistent.
  • The Committee judged that the current OCR remains accommodative, even after the July increase, and stated that additional tightening will probably be required over coming meetings. Policymakers emphasized that future decisions will depend on inflation expectations, firms’ pricing behaviour, labour market conditions, and the pace of economic recovery rather than following a predetermined path.
  • Economic activity slowed during the June quarter as higher energy costs temporarily weighed on demand, but the RBNZ expects the recovery to resume in the September quarter. The Bank’s Kiwi-GDP nowcasting model projects 0.6% quarterly GDP growth in Q3 2026, supported by improving business confidence, lower fuel prices, and stronger household purchasing power as inflation moderates.
  • External conditions remained mixed, with elevated global energy price volatility and geopolitical risks supporting upside inflation risks, while softer demand from key trading partners, especially China, continued to weigh on Australian export momentum.
  • Financial markets now broadly expect the RBA to hold rates at 4.35% through the third quarter, with the probability of further tightening slightly reduced but still present if services inflation or wage data re-accelerate.
  • The July statement emphasized a continued “data-dependent and patient” approach, signaling that policy will remain restrictive for longer if inflation proves persistent, while avoiding any commitment to near-term easing despite slower growth signals.
  • The next meeting is on 4 to 5 August 2026.

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news event

What can we expect from NZD today?

The New Zealand dollar (NZD) is beginning the week as traders balance the Reserve Bank of New Zealand’s relatively hawkish policy outlook against a series of high-impact U.S. economic releases due later today. Investors are also awaiting today’s U.S. ISM Manufacturing PMI and ISM Prices Paid data, which could significantly influence the U.S. dollar and, in turn, NZD/USD. Stronger-than-expected U.S. manufacturing data would likely strengthen the USD and weigh on the kiwi, while weaker readings could support NZD gains.

Central Bank Notes:

  • The Reserve Bank of New Zealand’s Monetary Policy Committee (MPC) raised the Official Cash Rate (OCR) by 25 basis points to 2.50% at its 8 July 2026 Monetary Policy Review, marking the first rate increase of the current tightening cycle. Unlike the split decision in May, the Committee reached a consensus that reducing monetary stimulus was appropriate to return inflation to target.
  • Although global oil prices have fallen following the partial reopening of the Strait of Hormuz, the RBNZ warned that inflation remains above its 1–3% target range and that lingering energy-related cost pressures continue to pose upside risks. The Bank reiterated that further OCR increases are likely, although the timing will remain dependent on incoming economic data.
  • The RBNZ now expects headline inflation to have peaked at 3.9% in Q2 2026, lower than the 4.3% peak projected in May, reflecting weaker oil prices. Inflation is forecast to ease to around 3.3% in Q3 2026 before gradually returning to the 2% midpoint by mid-2027, while underlying domestic inflation remains persistent.
  • The Committee judged that the current OCR remains accommodative, even after the July increase, and stated that additional tightening will probably be required over coming meetings. Policymakers emphasized that future decisions will depend on inflation expectations, firms’ pricing behaviour, labour market conditions, and the pace of economic recovery rather than following a predetermined path.
  • Economic activity slowed during the June quarter as higher energy costs temporarily weighed on demand, but the RBNZ expects the recovery to resume in the September quarter. The Bank’s Kiwi-GDP nowcasting model projects 0.6% quarterly GDP growth in Q3 2026, supported by improving business confidence, lower fuel prices, and stronger household purchasing power as inflation moderates.
  • Domestic demand remains uneven, with tourism, agriculture, and export industries continuing to outperform, while discretionary retail spending, construction, and housing activity remain subdued. The RBNZ believes spare capacity in the economy should limit widespread pass-through of higher business costs into consumer prices, although this remains an important upside inflation risk.
  • Financial conditions have eased since the May meeting as wholesale interest rates declined, and the New Zealand dollar depreciated, helping exporters but potentially adding to imported inflation. The Committee noted that shorter-term mortgage rates had increased earlier in the year, while longer-term borrowing costs have begun to stabilize alongside lower market interest-rate expectations.
  • The MPC concluded that maintaining price stability remains its primary objective, stressing that while further rate increases are expected, policy will remain data-dependent. The Committee believes returning inflation to the 2% midpoint is essential to achieving a sustainable recovery in employment, household incomes, and long-term economic growth.
  • The next meeting is on 2 September 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 Japanese yen begins Monday on a firmer footing after last week’s intervention-driven rebound, but its broader outlook remains fragile. Although intervention has temporarily slowed the yen’s decline, the Bank of Japan’s cautious policy stance and the still-large U.S.–Japan interest-rate gap continue to favor the U.S. dollar over the medium term. Today’s U.S. ISM manufacturing data will likely be the main catalyst for USD/JPY: stronger-than-expected figures could renew upward pressure on the pair, while weaker data may allow the yen to extend its recent recovery. Traders should also remain alert for any comments from Japanese officials, as the risk of further intervention remains elevated.

Central Bank Notes:

  • The Bank of Japan (BOJ) maintained the short-term policy rate at 1.00% at its 30–31 July 2026 Monetary Policy Meeting. The decision reflected confidence that Japan’s economy continues to recover moderately, while policymakers judged that further tightening should proceed gradually as they assess incoming data and the sustainability of inflation.
  • The BOJ continues to guide the uncollateralized overnight call rate at around 1.00%, emphasizing that future policy adjustments will remain data-dependent. The Bank reiterated that any additional rate increases will depend on sustained wage growth, inflation remaining durably around or above the 2% target, stable financial markets, and resilient domestic demand rather than following a predetermined path.
  • The Bank will continue reducing its purchases of Japanese Government Bonds (JGBs) in line with its previously announced tapering plan while maintaining flexibility to conduct market operations if excessive volatility threatens financial stability. Policymakers also remain attentive to sharp movements in the yen and their potential impact on inflation and financial conditions.
  • Japan’s economy continues to expand at a moderate pace, supported by firm domestic consumption, strong corporate investment, improving labor market conditions, and recovering global demand. However, uncertainty surrounding global trade, geopolitical developments, and external manufacturing activity continues to pose downside risks to the growth outlook.
  • Underlying inflation continues to strengthen. While headline inflation has moderated somewhat due to easing energy prices, core inflation remains above the BOJ’s 2% objective, supported by broad-based services inflation, rising labor costs, and stronger pricing behavior among firms. The BOJ now sees upside risks to medium-term inflation from persistent wage growth and structural price-setting changes.
  • Domestic inflationary pressures remain supported by robust wage settlements, persistent labor shortages, and continued pass-through of higher labor costs into services prices. At the same time, policymakers are closely monitoring the effects of yen depreciation, which could accelerate imported inflation if sustained, even as lower commodity and energy prices provide some offset.
  • The BOJ expects real GDP growth to remain moderate over the near term as accommodative financial conditions, rising household incomes, and business investment continue to support activity. Nevertheless, policymakers acknowledge that tighter global financial conditions, weaker external demand, and geopolitical uncertainty could temporarily restrain growth.
  • Looking ahead, the BOJ maintains that if inflation continues to stabilize around its 2% objective alongside sustained wage gains and economic expansion, further gradual policy normalization remains appropriate. Financial markets generally expect another 25-basis-point rate increase later in 2026, although the timing will depend on incoming economic and inflation data.
  • The next meeting is on 17 to 18 September 2026.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Crude oil is beginning the week with a cautious bullish tone as traders weigh ongoing geopolitical supply risks against expectations of higher OPEC+ production and key U.S. economic data later in the day. Market attention is focused on the U.S. ISM Manufacturing PMI and ISM Prices Paid reports, which could influence expectations for U.S. fuel demand and the Federal Reserve’s policy outlook. Stronger-than-expected manufacturing data would be supportive for crude through improved demand expectations, while weaker figures could pressure prices.

Next 24 Hours Bias
Weak Bearish

Risk Warning: Trading in securities involves significant risk. Prices may fluctuate and securities can become entirely valueless. You may incur losses that exceed your potential profits, and in some cases, losses may exceed the amount you have deposited. Securities, futures, options, and contracts for differences are complex financial instruments and are not suitable for all investors. Engaging in such transactions requires a sound understanding of the associated risks. Please read and ensure you fully understand our Risk Disclosure.

Our leverage is dynamic and may change at any time. Such changes may affect your positions and margin requirements. You are responsible for monitoring your positions and maintaining sufficient margin at all times

The post IC – Asia Fundamental Forecast | 03 August 2026 first appeared on IC Your Trading Edge | Official Blog.