IC – Asia Fundamental Forecast | 04 November 2026
What happened in the U.S. session?
The U.S. session was influenced mainly by stronger-than-expected economic data, Federal Reserve interest-rate expectations, midterm election uncertainty, and developments in the oil market.
The stronger economic figures supported the U.S. dollar and Treasury yields, creating potential downside pressure for gold and other dollar-denominated assets. Meanwhile, crude oil received support from a much larger-than-expected decline in U.S. inventories.
What does it mean for the Asia Session?
Asian markets enter Wednesday with several important developments influencing trading sentiment. The U.S. midterm elections are creating uncertainty for the dollar and global financial markets, while the Reserve Bank of Australia’s latest interest-rate increase is providing support for the Australian dollar. New Zealand employment figures and China’s services PMI will be particularly important for determining the direction of the NZD and other regional currencies.
The Dollar Index (DXY)
Key news events today
ISM Services PMI (3:00 pm GMT)
What can we expect from the DXY today?
The U.S. dollar is facing near-term pressure as investors assess the midterm election results and falling Treasury yields. The possibility of Democrats gaining control of Congress is raising questions about future U.S. fiscal policy, while geopolitical tensions involving Iran continue to create uncertainty.
However, the dollar’s downside may be limited by resilient U.S. economic activity, persistent inflation, and expectations that the Federal Reserve could maintain a restrictive monetary policy stance.
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 Bullish
Gold (XAU)
Key news events today
ISM Services PMI (3:00 pm GMT)
What can we expect from the Gold today?
Gold is trading slightly higher this Wednesday, supported by falling oil prices and easing inflation concerns. However, the recovery remains fragile as expectations of another Federal Reserve interest rate increase continue to limit buying interest. Investors are also monitoring the US midterm election results, geopolitical developments, and upcoming economic releases for further direction.
Next 24 Hours Bias
Strongly Bearish
The Australian Dollar (AUD)
Key news events today
No major news event
What can we expect from the AUD today?
The Australian dollar is facing mixed developments today. Although the RBA raised interest rates to 4.85%, the decision was accompanied by a surprisingly divided vote and signals that policymakers may pause further increases. This caused the AUD to weaken as traders reduced expectations of additional tightening. However, stronger-than-expected household spending provides some support by showing that the Australian economy remains resilient despite higher borrowing costs.
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
No major news event
What can we expect from the NZD today?
The New Zealand dollar faces renewed downside pressure on Wednesday after New Zealand’s latest employment report disappointed markets. Unemployment climbed to 5.7%, employment declined by 0.1%, and wage growth slowed, weakening expectations of another RBNZ interest-rate increase in December. The RBNZ’s recent decision to maintain interest rates at 2.75% adds to the pressure. Meanwhile, the upcoming November 7 election, US dollar movements, and Chinese economic data remain important external influences.
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
No major news event
What can we expect from the JPY today?
The Japanese yen remains under bearish pressure as expectations of a relatively hawkish Federal Reserve and higher US Treasury yields continue to favor the US dollar. The Bank of Japan’s decision to maintain interest rates at 1.25% has also limited the yen’s recovery, although expectations of a possible December rate hike provide some medium-term support. Meanwhile, Japanese authorities have renewed warnings about excessive currency movements, keeping intervention risks in focus. Recent US election developments have also weakened the dollar and provided some temporary support for the yen.
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
Medium Bullish
Oil
Key news events today
EIA Crude Oil Inventories (2:30 pm GMT)
What can we expect from the Oil today?
Oil prices are moving lower this Wednesday as traders take a cautious approach ahead of the US midterm election results and continue monitoring developments in the Middle East. Brent is trading around $103.34, while WTI is around $95.56. However, the unexpected 5.27-million-barrel decline in US crude inventories is providing some support, suggesting that available supply remains relatively tight. OPEC+ is also maintaining its production targets, limiting expectations of additional supply.
Next 24 Hours Bias
Medium Bullish
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