IC Markets Global – Asia Fundamental Forecast | 03 December 2025
What happened in the U.S. session?
During the latest U.S. session, markets focused on upcoming U.S. data (ADP employment, ISM services, oil inventories) and Fed expectations, with modest risk‑on flows into U.S. equities, a firmer dollar, and continued volatility in crypto, metals, and oil. The most impacted instruments were major U.S. stock indices (S&P 500, Nasdaq, Dow), bitcoin and crypto‑linked equities, the U.S. dollar vs. JPY/EUR, industrial metals (especially copper and silver), and crude oil benchmarks.
What does it mean for the Asia Session?
Asian markets are set to open with a tone of “cautious stabilization” following a turbulent start to the week. While US markets managed to arrest Monday’s sharp sell-off (S&P 500 -0.5%, Nasdaq -0.4%), conviction remains low. The immediate focus for the Asian session is Australia’s Q3 GDP release, but the broader narrative is dominated by the shockingly low forecast for US ADP Employment (5K) later in the day, which suggests traders are bracing for a potential stall in the US labor market.
The Dollar Index (DXY)
Key news events today
ADP Non-Farm Employment Change (1:15 pm GMT)
ISM Services PMI (3:00 pm GMT)
What can we expect from DXY today?
The U.S. Dollar Index (DXY) is trading soft around 99.40–99.50, hovering near a 2-week low. Weak economic data has cemented expectations for a rate cut. Markets are now pricing in an 87% chance that the Federal Reserve will cut rates by 25 basis points at its December 10 meeting. Investors are awaiting JOLTS Job Openings data and comments from Fed Chair Jerome Powell (scheduled for later today), which could further confirm the dovish outlook.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) voted, by majority, to lower the federal funds rate target range by 25 basis points to 3.75% — 4.00% at its October 28–29, 2025, meeting, marking the second consecutive cut following the 25 basis points reduction in September.
- The Committee maintained its long-term objectives of maximum employment and 2% inflation, noting that the labor market continues to soften, with modest job creation and an unemployment rate edging higher. In comparison, inflation remains above target at around 3.0%.
- Policymakers highlighted ongoing downside risks to economic growth, tempered by signs of resilient economic activity. September’s consumer price index (CPI) came in slightly below expectations at 3.0% year-over-year, easing inflationary pressure but still warranting vigilance amid tariff-driven price effects.
- Economic activity expanded modestly in the third quarter, with GDP growth estimates around 1.0% annualized; however, uncertainty remains elevated amid persistent global trade tensions and the U.S. government shutdown, which is impacting data availability.
- The updated Summary of Economic Projections anticipates an unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections remaining near 3.0%, indicating a slow easing path ahead.
- The Committee emphasized its flexible, data-dependent approach and underscored that future policy adjustments will be guided by incoming labor market and inflation data. As in prior meetings, there was dissent, including one member advocating a more aggressive 50-basis-point cut.
- The FOMC announced the planned conclusion of its balance sheet reduction (quantitative tightening) program, intending to cease runoff in the near term to maintain market stability. Treasury redemption caps will remain steady at $5 billion per month, and agency mortgage-backed securities caps will remain at $35 billion.
- The next meeting is scheduled for 9 to 10 December 2025.
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
ADP Non-Farm Employment Change (1:15 pm GMT)
ISM Services PMI (3:00 pm GMT)
What can we expect from Gold today?
Gold (XAU/USD) is currently trading in a bullish consolidation phase around $4,220–$4,235, supported by high expectations of a Federal Reserve rate cut later this month. Gold remains strong following weak US manufacturing data, with traders buying dips near $4,200. Volatility is expected to spike. The key event is the ADP Non-Farm Employment Change (1:15 PM), where forecasts are exceptionally low (5K–7K vs. 42K previous). A result this low would signal severe labor market cooling, likely pushing Gold prices higher toward $4,265 or $4,300.
Next 24 Hours Bias
Medium Bullish
The Australian Dollar (AUD)
Key news events today
GDP q/q (12:30 am GMT)
What can we expect from AUD today?
The Australian Dollar (AUD) has found fresh bullish momentum today, trading firmly around 0.6550–0.6570, following a stronger-than-expected Q3 GDP release. The Australian economy grew by 0.7% in the third quarter (beating the 0.6% forecast), driven by a surge in government spending and resilient business investment.
Central Bank Notes:
- The Reserve Bank of Australia held its cash rate steady at 3.60% at the November policy meeting, citing persistent inflationary pressures and lingering uncertainties in both domestic and global outlooks. This is the third consecutive pause following the cut in August.
- Policymakers remain alert to renewed inflation momentum. After a temporary uptick in September’s CPI, trimmed mean inflation for Q3 stands at 3.0%, above the intended 2–3% band. The RBA now anticipates that core inflation will stay above target until at least mid-2026, delaying any hopes of further easing.
- Headline CPI climbed by 3.2% in the year to September 2025, driven by resilient housing (+2.5%) and insurance costs, while discretionary goods inflation is subdued. The transition to monthly CPI reporting from November will improve the accuracy of inflation tracking.
- Domestic demand remains firm, particularly in services and housing, while manufacturing and discretionary retail continue to lag. Household incomes have stabilized, but high borrowing costs and elevated rents are constraining consumption and risking a slowdown in Q1 2026.
- Labor market tightness persists, though job growth has moderated. Underutilization edged higher. Wage growth is plateauing, but weak productivity is keeping unit labor costs elevated—a medium-term risk that remains central to the Board’s narrative.
- The RBA highlights geopolitical tensions and volatile commodity markets as primary global risks, against a backdrop of modest upward revisions to world growth forecasts. The Board stresses that its stance remains “cautious and data-dependent,” with ongoing vigilance on inflation, labor, and spending trends.
- Monetary policy remains mildly restrictive, balancing progress on price stability against vulnerabilities in household demand and global outlook. Board communications reaffirm a dual mandate: price stability and full employment, while underscoring readiness to respond should risks materialize sharply.
- Analysts generally expect the cash rate to remain at current levels through early 2026, with only modest cuts possible later in the year if inflation moderates. The new monthly CPI release (first full edition Nov 2025) will be watched closely for timely signals on price trends.
- The next meeting is on 9 December 2025.
Next 24 Hours Bias
Medium Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from NZD today?
The NZD sits in a “cautious recovery” regime: policy has shifted from aggressive easing to wait‑and‑see, domestic data are surprisingly positive, and markets are trimming expectations for additional near‑term cuts, all of which are modestly NZD‑supportive as long as global risk conditions stay stable.
Central Bank Notes:
- The Monetary Policy Committee (MPC) left the Official Cash Rate (OCR) unchanged at 2.25% at its 26 November 2025 meeting, following the widely anticipated 25-basis-point reduction from 2.50%, and signaled that policy is now firmly in stimulatory territory while keeping the option of further easing on the table if needed.
- The decision was again reached by consensus, with members judging that the cumulative 325 basis points of easing over the past year warranted a period of assessment, even as several emphasized a willingness to cut further should incoming data point to a more protracted downturn or renewed disinflationary pressures.
- Headline consumer price inflation is projected to hover near 3% in late 2025 before gradually easing toward the 2% midpoint of the 1–3% target band through 2026, supported by contained inflation expectations around 2.3% over the two-year horizon and an expected pickup in spare capacity.
- The MPC noted that domestic demand remains subdued but shows tentative signs of stabilisation, with softer household spending and construction only partially offset by improving services activity; nevertheless, policymakers still expect services inflation to ease as wage growth moderates and the labour market loosens further over the coming year.
- Financial conditions continue to ease as wholesale and retail borrowing rates reprice to the lower OCR, contributing to gradually rising mortgage approvals and improving housing-related sentiment, although broader business credit growth remains patchy and sensitive to uncertainty about the durability of the recovery.
- Recent data confirm that GDP momentum is weak but not deteriorating as sharply as earlier in 2025, with high-frequency indicators pointing to a shallow recovery from a low base and ongoing headwinds from elevated living costs and fragile confidence weighing on discretionary consumption and investment.
- The MPC reiterated that external risks remain skewed to the downside, particularly from softer Chinese demand and uncertainty around United States trade policy, but noted that a lower New Zealand dollar continues to provide some offset via improved export competitiveness and support for tradables inflation.
- Looking ahead to early 2026, the Committee maintained a mild easing bias, indicating that a further cut toward 2.00–2.10% cannot be ruled out if activity fails to gain traction or if inflation undershoots projections, but current forecasts envisage the OCR remaining near 2.25% for an extended period provided inflation converges toward target and the recovery proceeds broadly as expected.
- The next meeting is on 18 February 2026.
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
Key news events today
No major news event
What can we expect from JPY today?
The market still sees December as a seasonally soft month for USD/JPY, and the pair has already broken a prior bullish trendline, so any renewed risk‑off or stronger BOJ signals could trigger deeper yen gains toward the low‑150s.
However, with US policy still expected to ease only gradually and Japan’s economy fragile, base case pricing keeps USD/JPY elevated, with officials in Washington and Tokyo both watching for disorderly moves if the rate tests the 158–160 “intervention zone” again.
Central Bank Notes:
- The Policy Board of the Bank of Japan met on 30–31 October and, by a clear majority vote, decided to maintain its key monetary policy approach for the upcoming period.
- The BOJ will continue to encourage the uncollateralized overnight call rate to remain at around 0.5%, in line with the prior stance.
- The gradual quarterly reduction in monthly outright purchases of Japanese Government Bonds (JGBs) remains intact, with amounts unchanged from the previous schedule. Purchases are set to decrease by about ¥400 billion per quarter through March 2026, shifting to about ¥200 billion per quarter from April to June 2026, and targeting a ¥2 trillion purchase level for Q1 2027. The bank reaffirmed its intention to maintain flexibility, with readiness to respond if market conditions warrant an adjustment.
- Japan’s economy continues to show moderate recovery, primarily led by solid capital expenditures, although export growth and corporate activity remain restrained by external demand uncertainty and the ongoing effects of U.S. trade policies.
- Annual headline inflation (excluding fresh food) accelerated to 2.9% year-on-year in September, marking the first uptick in four months and staying above the BOJ’s 2% target. Broad-based inflation persists, with food and energy cost pressures, but wage growth continues to support household consumption. Input cost pressures from the earlier surge in imports eased slightly.
- Short-term inflation momentum could moderate as food-price hikes ease, though rent, healthcare, and service-sector price increases tied to labor shortages provide support. Firms and households maintain a gradual upward drift in inflation expectations.
- For the near term, BOJ projects growth below trend as external demand stays subdued and corporate investment plans remain cautious. Still, accommodative financial conditions and steady gains in real labor income will underpin domestic consumption.
- Over the medium term, as overseas economies recover and trade conditions normalize, Japan’s growth potential should improve. Persistent labor market tightness, higher wage settlements, and rising medium- to long-term inflation expectations are expected to keep core inflation on a gradual upward trajectory, converging toward the 2% price stability target later in the forecast horizon.
- The next meeting is scheduled for 18 to 19 December 2025.
Next 24 Hours Bias
Medium Bearish
Oil
Key news events today
EIA Crude Oil Inventories (2:30 pm GMT)
What can we expect from Oil today?
Oil sits in a corrective pullback after a short‑covering bounce, with sentiment neutral‑to‑slightly bearish over the past month but underpinned by OPEC+ discipline and localized supply disruptions. Expect headline sensitivity to any surprise OPEC+ commentary, developments in Russia‑Ukraine/Venezuela, and incoming macro data that could shift demand expectations.
Next 24 Hours Bias
Medium Bearish
The post IC Markets Global – Asia Fundamental Forecast | 03 December 2025 first appeared on IC Markets | Official Blog.