IC – Asia Fundamental Forecast | 30 September 2026
What happened in the U.S. session?
The overnight U.S. session was dominated by contrasting signals about the U.S. economy and Federal Reserve policy. The decline in job openings and sharp deterioration in consumer confidence pointed toward some weakening in economic conditions, while inflation remained sufficiently high for several Fed officials to argue for further tightening. Williams’ comments subsequently reduced expectations for an immediate October hike, helping Treasury yields retreat from their highs, but long-term yields remained elevated. At the same time, Middle East tensions kept oil prices and inflation expectations volatile.
What does it mean for the Asia Session?
Australia’s higher inflation, China’s modest economic improvement, and continued weakness in the Japanese yen are the main market themes. China’s stronger PMI is positive for AUD and China-sensitive commodities, while Australia’s inflation data could keep AUD pairs volatile. Traders should also watch USD/JPY around 157 for any intervention-related headlines. Meanwhile, high U.S. yields and oil above $100 are supporting market volatility. Later, U.S. ADP employment, Core PCE inflation, and final GDP data will be important for the USD, Treasury yields, gold, and global stocks.
The Dollar Index (DXY)
Key news events today
ADP Non-Farm Employment Change (12:15 pm GMT)
Core PCE Price Index m/m (12:30 pm GMT)
Final GDP q/q (12:30 pm GMT)
Final GDP Price Index q/q (12:30 pm GMT)
What can we expect from the DXY today?
The dollar enters Wednesday with a generally firm tone, supported by elevated U.S. Treasury yields, relatively strong U.S. economic expectations, and weakness in several major currencies. However, the recent comments from John Williams have taken some pressure off expectations for an immediate Fed hike. Today’s ADP employment, Core PCE inflation, and GDP figures are therefore the major catalysts for the USD, particularly because stronger data could reinforce the current yield/dollar strength, while weaker data could trigger some profit-taking in the dollar.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) raised the federal funds target range by 25 basis points to 3.75%–4.00% at its September 15–16, 2026, meeting. The decision was approved unanimously by a 12–0 vote, marking a shift from the July meeting, when rates were held at 3.50%–3.75%. The Fed said the move was intended to support its dual mandate and promote a more timely return of inflation toward its 2% objective.
- The labor market remains relatively resilient. The September FOMC statement said job gains have kept pace with workforce growth and that the unemployment rate has changed little. The Fed continues to monitor employment conditions closely alongside inflation when determining the appropriate path for monetary policy.
- Inflation remains above the Federal Reserve’s 2% target and continues to be a key policy concern. The September decision explicitly noted that inflation remains elevated. The latest projections put median headline PCE inflation at 3.7% for 2026, before falling to 2.3% in 2027, 2.1% in 2028, and 2.0% in 2029. Core PCE inflation is projected at 3.4% in 2026, declining to 2.5% in 2027 and 2.2% in 2028.
- Economic activity continues to expand at a solid pace. The Fed highlighted resilient domestic spending, strong productivity growth, and robust capital investment, although uncertainty remains elevated partly because of geopolitical developments. The September projections raised the median 2026 GDP-growth forecast to 2.3%, compared with 2.2% in the June projections.
- The September projections show a higher expected policy-rate path than in June. The median projection for the federal funds rate is now 4.1% at the end of 2026, compared with 3.8% in the June projections. The median is projected at 4.1% in 2027, 3.9% in 2028, and 3.6% in 2029. This indicates that policymakers’ projected rate path remains relatively restrictive while inflation is expected to move gradually toward the target.
- Chair Kevin Warsh continues to emphasize the importance of returning inflation to 2%. Ahead of the September meeting, Warsh indicated that the Fed would have further work to do if policymakers could not gain sufficient confidence that inflation was moving toward the 2% objective. The September decision subsequently delivered a 25-basis-point hike, while the Committee continued to emphasize its assessment of incoming economic data and risks.
- The September economic projections show a more balanced growth outlook but continued inflation risks. The median unemployment forecast is 4.1% for 2026 and 2027, while the Fed projects GDP growth of 2.3% in 2026 and 2.4% in 2027. At the same time, PCE inflation is expected to remain substantially above target through 2026 before moving closer to 2% over subsequent years.
- The next meeting is scheduled for 27 to 28 October 2026.
Next 24 Hours Bias
Medium Bullish
Gold (XAU)
Key news events today
ADP Non-Farm Employment Change (12:15 pm GMT)
Core PCE Price Index m/m (12:30 pm GMT)
Final GDP q/q (12:30 pm GMT)
Final GDP Price Index q/q (12:30 pm GMT)
What can we expect from the Gold today?
Gold is currently caught between competing forces. Safe-haven demand from the Middle East conflict and the recent easing in oil prices are helping the metal stabilize after Monday’s sharp decline, while elevated Treasury yields, a firm dollar, and expectations for further Fed tightening are limiting the upside. Gold is around $4,180/oz, with traders likely to focus heavily on today’s ADP employment data and especially Core PCE inflation for the next significant move.
Next 24 Hours Bias
Medium Bearish
The Australian Dollar (AUD)
Key news events today
CPI m/m (1:30 am GMT)
CPI y/y (1:30 am GMT)
Trimmed Mean CPI m/m (1:30 am GMT)
What can we expect from the AUD today?
The AUD is being pulled in opposite directions today. Australia’s inflation rate remains uncomfortably high at 4.0%, reinforcing the RBA’s need for restrictive monetary policy, and the RBA has already lifted rates to 4.60%. However, the latest CPI figures were slightly softer than forecasts, reducing the immediate pressure for additional rate increases and contributing to the Aussie’s decline. Meanwhile, improving Chinese manufacturing data offers some external support because of Australia’s strong trade relationship with China.
Central Bank Notes:
- The RBA raised the cash rate by 25bps to 4.60% on 29 September, its fourth hike of 2026. The RBA said further tightening remains possible if inflation stays elevated.
- July CPI eased to 3.5% year-on-year, but trimmed-mean inflation remained at 3.6%, showing that underlying price pressures are still above the RBA’s 2–3% target. August CPI is due on 30 September.
- Unemployment increased to 4.6% in August, while employment rose by around 39,000. The labor market is cooling gradually but remains relatively resilient.
- Wage growth rose 0.8% quarter-on-quarter and 3.2% year-on-year in Q2 2026. Slower annual wage growth could help reduce inflation pressure, although wage growth remains elevated compared with pre-pandemic levels.
- Higher interest rates are weighing on household spending and housing activity. The RBA noted that consumer spending is easing gradually and new housing loans have declined.
- Higher global oil prices and Middle East tensions are creating additional inflation risks for Australia. The RBA is also monitoring global growth, China, and commodity prices.
- Markets will closely watch August inflation, employment, wages, consumer spending, and global energy prices for clues about the RBA’s next move.
- The next meeting is on 2-3 October 2026.
Next 24 Hours Bias
Medium Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news event
What can we expect from the NZD today?
The NZD is facing a combination of broad U.S.-dollar strength, weaker recent currency momentum, and a modest pullback in New Zealand business confidence. Domestic economic conditions are improving, but the recovery remains uneven, and higher oil prices are an inflation risk for the RBNZ. For traders today, NZD/USD is likely to remain particularly sensitive to U.S. Core PCE inflation, U.S. Treasury yields, and broader USD movements, while the ANZ confidence data provide a secondary domestic signal.
Central Bank Notes:
- The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points to 2.75% at its 2 September 2026 Monetary Policy Statement meeting. The decision was reached by consensus, marking another step in the bank’s tightening cycle as policymakers seek to bring inflation sustainably back toward the 2% midpoint.
- Inflation remains the key reason behind the RBNZ’s tightening stance. Annual consumer inflation increased to 4.1% in the June 2026 quarter, driven largely by higher fuel prices associated with the Middle East conflict. The RBNZ expects inflation to remain above 3% for the remainder of 2026 before returning to the 1–3% target range next year and moving toward the 2% midpoint.
- Energy prices and geopolitical developments remain an important upside risk to inflation. Higher petrol and diesel prices have increased transportation and production costs, feeding into prices for goods and services such as food and air travel. The RBNZ remains concerned that renewed increases in energy prices could make inflation more persistent than currently expected.
- The RBNZ indicated that further OCR increases may still be required this year, but policy is not on a predetermined path. Future decisions will depend on the balance of risks to medium-term inflation, including inflation expectations, domestic price pressures, economic activity, and the response of households and businesses to tighter financial conditions.
- New Zealand’s economic recovery appears to have resumed, although growth remains uneven. Economic activity was lacklustre during the June quarter as higher fuel costs reduced household purchasing power. However, stronger export prices and resilient demand from trading partners are supporting income growth and investment, particularly in export-oriented sectors.
- Household demand and the housing market remain areas of weakness. Weak income growth, job insecurity, and relatively flat house prices continue to weigh on household spending and residential investment, particularly in Auckland and Wellington. The RBNZ nevertheless expects the recovery to strengthen gradually as inflation declines and purchasing power improves.
- The labor market remains relatively soft, but the Bank expects conditions to improve as economic activity strengthens. High unemployment and subdued household demand remain a concern, but stronger economic growth should gradually encourage businesses to increase hiring. This creates a delicate balance for the RBNZ between containing inflation and avoiding unnecessary weakness in employment and output.
- The RBNZ continues to see strong export performance as an important support for the economy. New Zealand’s agricultural and other export sectors are benefiting from resilient global demand and strong commodity prices, helping offset weakness in domestic consumption and residential investment.
- The next meeting is on 28 October 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 yen is relatively supported today by Japan’s increasingly explicit warnings about excessive yen weakness and the possibility of further FX intervention, but this support is being offset by very high U.S. Treasury yields and expectations that U.S. interest rates could remain restrictive. Meanwhile, Japan’s weak August industrial-production and retail-sales figures provide a softer domestic economic backdrop. USD/JPY around the 157 area is therefore the key market to watch, with today’s U.S. ADP and Core PCE releases potentially producing the next significant move.
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 signalled 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
Weak Bearish
Oil
Key news events today
EIA Crude Oil Inventories (12:30 pm GMT)
What can we expect from the Oil today?
Oil markets are experiencing bearish pressure on Wednesday, as Saudi Arabia restores export capacity and Middle Eastern crude shipments improve. WTI has fallen below $90 per barrel, while Brent remains above $100. Nevertheless, ongoing U.S.–Iran tensions, uncertainty surrounding the Strait of Hormuz, and upcoming U.S. economic data could trigger renewed volatility. Traders are monitoring supply developments and economic releases for clearer indications of the next directional move.
Next 24 Hours Bias
Medium Bearish
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