IC – Asia Fundamental Forecast | 30 October 2026
What happened in the U.S. session?
The tension between resilient U.S. economic growth and persistent inflation remains the strongest fundamental theme. This keeps the Fed outlook uncertain. Gold remains vulnerable to higher-rate expectations, while the dollar could receive support if markets increasingly anticipate another rate hike. Oil remains sensitive to geopolitical developments, and technology stocks face additional pressure from concerns about AI spending.
What does it mean for the Asia Session?
Asian markets enter Friday with monetary policy and economic growth expectations taking center stage. The Bank of Japan’s interest-rate decision is likely to be the biggest regional catalyst, particularly for the Japanese yen and Nikkei 225. Although rates are expected to remain unchanged, any indication of further tightening could support the yen.
Gold and silver will remain sensitive to movements in the dollar and Treasury yields, while oil prices will continue reacting to geopolitical developments and global demand expectations.
The Dollar Index (DXY)
Key news events today
Employment Cost Index q/q (7:30 am GMT)
What can we expect from the DXY today?
The US dollar remains supported by a relatively hawkish Federal Reserve, stronger US economic growth, and persistent inflation pressures. The Fed’s decision to maintain interest rates at 3.75%–4.00%, together with two policymakers favoring another increase, has kept expectations of further monetary tightening alive.
However, the dollar is facing some resistance from declining Treasury yields and uncertainty surrounding the timing of the next rate increase. Meanwhile, the euro has gained some ground, creating additional pressure on the dollar.
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
Employment Cost Index q/q (7:30 am GMT)
What can we expect from the Gold today?
Gold is facing renewed selling pressure as stronger US economic data and persistent inflation increase expectations of another Federal Reserve interest-rate hike in December. Although the Fed kept rates unchanged, the two dissenting policymakers who supported an immediate increase reinforced the possibility of further monetary tightening.
The latest US PCE inflation figures added to these concerns, pushing gold lower towards the important $4,000 psychological support level.
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 has a relatively positive fundamental outlook heading into Friday’s trading session, mainly because Australia’s stronger-than-expected inflation figures have increased expectations of another RBA interest-rate hike on November 3. This is supportive of the AUD because higher interest rates can attract foreign investment and improve the currency’s yield advantage.
However, rising unemployment, weaker business confidence, and slowing economic conditions remain concerns. These factors could limit how aggressively the RBA raises interest rates in the coming months.
Central Bank Notes:
- The RBA raised the cash rate by 25bps to 4.60% on 29 September, its fourth hike of 2026 and the highest cash rate since 2011. The RBA said higher rates are needed to bring inflation back to target, while further tightening remains possible if inflationary pressures persist.
- Inflation has become a major concern for the RBA. August CPI rose to 4.0% year-on-year, up sharply from 3.5% in July, while trimmed-mean inflation remained at 3.6%. Higher housing and fuel costs were important contributors, keeping underlying inflation well above the RBA’s 2–3% target.
- The labor market is cooling but remains relatively resilient. Australia’s unemployment rate increased to 4.6% in August, while employment increased by around 39,500. The rise in unemployment provides some evidence that higher rates are slowing the economy, although employment growth remains positive.
- Wage growth remains an important inflation risk. The Wage Price Index increased 0.8% quarter-on-quarter and 3.2% year-on-year in Q2 2026. Moderating wage growth would help ease domestic inflation pressures, but wages remain above levels that would be consistent with very low inflation.
- Household demand is showing signs of slowing under higher interest rates. Household spending was unchanged in August after strong increases in June and July, although spending was still 6.8% higher than a year earlier. Housing activity also weakened, with total dwelling approvals falling 6.1% in August.
- Economic growth remains positive but subdued. Australia’s GDP increased 0.4% in Q2 2026 and 2.1% year-on-year, suggesting the economy is still expanding but not particularly strongly. The RBA will need to balance persistent inflation against the growing impact of restrictive monetary policy on households and housing.
- Global energy prices are becoming an additional inflation risk. Middle East tensions and disruptions to energy supplies have pushed oil prices higher, while China’s suspension of fuel exports in October has added pressure to Asian fuel markets. Higher energy costs could keep Australian inflation elevated and make it harder for the RBA to ease policy.
- The next meeting is on 2-3 November 2026.
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 has a relatively positive fundamental outlook heading into Friday’s trading session, mainly because Australia’s stronger-than-expected inflation figures have increased expectations of another RBA interest-rate hike on November 3. This is supportive of the AUD because higher interest rates can attract foreign investment and improve the currency’s yield advantage.
However, rising unemployment, weaker business confidence, and slowing economic conditions remain concerns. These factors could limit how aggressively the RBA raises interest rates in the coming months.
Central Bank Notes:
- The RBA raised the cash rate by 25bps to 4.60% on 29 September, its fourth hike of 2026 and the highest cash rate since 2011. The RBA said higher rates are needed to bring inflation back to target, while further tightening remains possible if inflationary pressures persist.
- Inflation has become a major concern for the RBA. August CPI rose to 4.0% year-on-year, up sharply from 3.5% in July, while trimmed-mean inflation remained at 3.6%. Higher housing and fuel costs were important contributors, keeping underlying inflation well above the RBA’s 2–3% target.
- The labor market is cooling but remains relatively resilient. Australia’s unemployment rate increased to 4.6% in August, while employment increased by around 39,500. The rise in unemployment provides some evidence that higher rates are slowing the economy, although employment growth remains positive.
- Wage growth remains an important inflation risk. The Wage Price Index increased 0.8% quarter-on-quarter and 3.2% year-on-year in Q2 2026. Moderating wage growth would help ease domestic inflation pressures, but wages remain above levels that would be consistent with very low inflation.
- Household demand is showing signs of slowing under higher interest rates. Household spending was unchanged in August after strong increases in June and July, although spending was still 6.8% higher than a year earlier. Housing activity also weakened, with total dwelling approvals falling 6.1% in August.
- Economic growth remains positive but subdued. Australia’s GDP increased 0.4% in Q2 2026 and 2.1% year-on-year, suggesting the economy is still expanding but not particularly strongly. The RBA will need to balance persistent inflation against the growing impact of restrictive monetary policy on households and housing.
- Global energy prices are becoming an additional inflation risk. Middle East tensions and disruptions to energy supplies have pushed oil prices higher, while China’s suspension of fuel exports in October has added pressure to Asian fuel markets. Higher energy costs could keep Australian inflation elevated and make it harder for the RBA to ease policy.
- The next meeting is on 2-3 November 2026.
Next 24 Hours Bias
Medium Bullish
The Japanese Yen (JPY)
Key news events today
BOJ Press Conference (Tentative)
What can we expect from the JPY today?
Inflation remains above the BOJ’s 2% target, keeping expectations of further interest-rate increases alive. However, expectations that the central bank will leave rates unchanged today are limiting the yen’s ability to strengthen.
Meanwhile, Japanese authorities remain concerned about excessive yen weakness and have warned that they are prepared to intervene if necessary. This creates additional uncertainty for traders, particularly in USD/JPY.
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 signaled 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
Medium Bearish
Oil
Key news events today
No major news event
What can we expect from the Oil today?
Oil prices are edging higher on Friday as geopolitical uncertainty continues to outweigh some of the positive signals from renewed US-Iran diplomatic efforts. Brent is trading around $115, while WTI is near $103.
The biggest support for crude comes from continuing Middle Eastern supply concerns, attacks involving Saudi Arabia and Yemen, and the unexpected decline in US crude and diesel inventories. However, hopes of a diplomatic agreement with Iran and the additional release of emergency oil reserves are limiting stronger gains.
Next 24 Hours Bias
Medium Bullish
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