{"id":88540,"date":"2026-07-31T17:27:26","date_gmt":"2026-07-31T07:27:26","guid":{"rendered":"https:\/\/ic.com\/blog\/?p=88540"},"modified":"2026-07-31T17:27:27","modified_gmt":"2026-07-31T07:27:27","slug":"ic-asia-fundamental-forecast-31-july-2026","status":"publish","type":"post","link":"https:\/\/ic.com\/blog\/ic-asia-fundamental-forecast-31-july-2026\/","title":{"rendered":"IC &#8211; Asia Fundamental Forecast | 31 July 2026"},"content":{"rendered":"\n<p><strong>IC &#8211; Asia Fundamental Forecast | 31 July 2026<\/strong><\/p>\n\n\n\n<p><strong>What happened in the U.S. session?<\/strong><strong><br \/><\/strong><strong><br \/><\/strong>Markets were dominated by a softer-than-expected Q2 GDP report, cooling PCE inflation, and a resilient labor market, all arriving one day after the Federal Reserve maintained its policy stance. The macro data suggested that economic growth is moderating while inflation continues to ease, leaving investors uncertain about the timing of future Fed moves. Equity markets ultimately focused on corporate earnings, with Microsoft&#8217;s strong results igniting a powerful rally in technology and semiconductor stocks that outweighed weakness in Meta.<br \/><br \/><strong>What does it mean for the Asia Session?<\/strong><br \/><br \/>Friday&#8217;s Asian session will be dominated by the Bank of Japan&#8217;s policy announcement and Governor&#8217;s guidance, making the Japanese yen the primary driver of market volatility. While the BoJ is expected to leave interest rates unchanged, traders will closely examine its updated outlook for clues on the timing of any future policy tightening. Later in the day, attention will shift to Eurozone inflation, Canadian GDP, and the U.S. Employment Cost Index, all of which could influence expectations for global interest rates after an eventful week of central bank decisions.<br \/>\u200b<br \/><strong>The Dollar Index (DXY)<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><\/p>\n\n\n\n<p>Employment Cost Index q\/q (12:30 pm GMT)<br \/><br \/>Revised UoM Consumer Sentiment (2:00 pm GMT)<br \/><br \/>Revised UoM Inflation Expectations (2:00 pm GMT)<br \/><br \/><strong>What can we expect from DXY today?<\/strong><strong><br \/><\/strong><strong><br \/><\/strong><strong>T<\/strong>he U.S. Dollar enters Friday on a cautious but fundamentally supported footing. While softer inflation and slower GDP growth initially weighed on the currency, the Federal Reserve&#8217;s hawkish stance, elevated Treasury yields, and persistent inflation risks continue to provide underlying support. Today&#8217;s Employment Cost Index and University of Michigan sentiment data are likely to determine the Dollar&#8217;s next move. Stronger-than-expected wage or inflation-expectation figures would increase expectations of further Fed tightening and could strengthen the USD, whereas weaker readings may encourage additional profit-taking and a softer Dollar.<\/p>\n\n\n\n<p><br \/><strong>Central Bank Notes:<\/strong><\/p>\n\n\n\n<ul>\n<li>The Federal Open Market Committee (FOMC) kept the federal funds rate unchanged at 3.50%\u20133.75% at its July 28\u201329, 2026, meeting, marking the fifth consecutive meeting without a policy change. The Committee voted 9\u20133 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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>Inflation remains the Committee&#8217;s primary concern. While some recent inflation data have shown moderation, overall price pressures remain above the Fed&#8217;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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>The July meeting highlighted increasing divisions within the Committee. Three policymakers\u2014Beth Hammack, Neel Kashkari, and Lorie Logan\u2014voted 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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>The next meeting is scheduled for 15 to 16 September 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><\/p>\n\n\n\n<p>Weak Bullish<\/p>\n\n\n\n<p><strong>Gold (XAU)<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><br \/><br \/>Employment Cost Index q\/q (12:30 pm GMT)<br \/><br \/>Revised UoM Consumer Sentiment (2:00 pm GMT)<br \/><br \/>Revised UoM Inflation Expectations (2:00 pm GMT)<\/p>\n\n\n\n<p><strong>What can we expect from Gold today?<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.tradingview.com\/symbols\/XAUUSD\/?exchange=ICMARKETS\" title=\"\">Gold<\/a> is on a cautious footing as investors await a series of major economic events that could determine its next directional move. The market is balancing expectations of prolonged global monetary tightening against continued safe-haven demand. The BOJ&#8217;s policy announcement and guidance will set the tone during the Asian session, while Eurozone inflation and key U.S. economic data later in the day are likely to drive the strongest price swings. Unless today&#8217;s data materially weakens the U.S. dollar or lowers interest-rate expectations, gold may remain under short-term pressure, although its longer-term outlook continues to be supported by central bank buying and lingering global economic uncertainty.<br \/><br \/><strong>Next 24 Hours Bias<\/strong><br \/>Strong bullish<\/p>\n\n\n\n<p><strong>The Australian Dollar (AUD)<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><\/p>\n\n\n\n<p>No major news event<\/p>\n\n\n\n<p><strong>What can we expect from AUD today?<\/strong><\/p>\n\n\n\n<p>The Australian dollar enters Friday with a slightly bearish to neutral bias. The biggest development this week has been Australia&#8217;s softer-than-expected inflation data, which significantly reduced expectations of another RBA rate hike and removed an important source of support for the currency. However, improving global risk appetite and resilient commodity prices have helped cushion losses. During today&#8217;s trading, traders will closely watch the Bank of Japan&#8217;s policy announcements for direction in AUD\/JPY, while broader market sentiment and U.S. data later in the session will determine whether the AUD can stabilize or extend its recent weakness<br \/><br \/><strong>Central Bank Notes:<\/strong><\/p>\n\n\n\n<ul>\n<li>The Reserve Bank of New Zealand&#8217;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.<\/li>\n\n\n\n<li>Although global oil prices have fallen following the partial reopening of the Strait of Hormuz, the RBNZ warned that inflation remains above its 1\u20133% 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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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&#8217; pricing behaviour, labour market conditions, and the pace of economic recovery rather than following a predetermined path.<\/li>\n\n\n\n<li>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&#8217;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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>The July statement emphasized a continued \u201cdata-dependent and patient\u201d 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.<\/li>\n\n\n\n<li>The next meeting is on 4 to 5 August 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><\/p>\n\n\n\n<p>Weak Bullish<\/p>\n\n\n\n<p><strong>The Kiwi Dollar (NZD)<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><br \/><br \/>No major news event<\/p>\n\n\n\n<p><strong>What can we expect from NZD today?<\/strong><\/p>\n\n\n\n<p>The New Zealand dollar has little domestic news to drive trading, leaving it highly dependent on international developments. The Bank of Japan&#8217;s policy announcements are the primary focus during the Asian session, while U.S. inflation and consumer sentiment data later in the day could determine the direction of NZD\/USD. Underlying sentiment toward the kiwi remains cautiously constructive after New Zealand&#8217;s recent inflation data reinforced expectations that the Reserve Bank of New Zealand may need to tighten monetary policy further.<\/p>\n\n\n\n<p><br \/><strong>Central Bank Notes:<\/strong><\/p>\n\n\n\n<ul>\n<li>The Reserve Bank of New Zealand&#8217;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.<\/li>\n\n\n\n<li>Although global oil prices have fallen following the partial reopening of the Strait of Hormuz, the RBNZ warned that inflation remains above its 1\u20133% 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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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&#8217; pricing behaviour, labour market conditions, and the pace of economic recovery rather than following a predetermined path.<\/li>\n\n\n\n<li>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&#8217;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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>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.<\/li>\n\n\n\n<li>The next meeting is on 2 September 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><\/p>\n\n\n\n<p>Weak Bearish<\/p>\n\n\n\n<p><strong>The Japanese Yen (JPY)<\/strong><strong><br \/><\/strong><strong><br \/><\/strong><strong>Key news events today<\/strong><\/p>\n\n\n\n<p>BOJ Policy Rate (Tentative)<br \/><br \/>Monetary Policy Statement (Tentative)<br \/><br \/>BOJ Outlook Report (Tentative)<br \/><br \/>BOJ Press Conference (Tentative)<\/p>\n\n\n\n<p><strong>What can we expect from JPY today?<br \/><br \/><\/strong>The Japanese <a href=\"https:\/\/www.tradingview.com\/symbols\/USDJPY\/?exchange=ICMARKETS\" title=\"\">yen <\/a>enters Friday&#8217;s BOJ meeting at a pivotal moment. Investors are less concerned about whether interest rates remain at 1.00% and more interested in the Bank of Japan&#8217;s forward guidance, inflation forecasts, and Governor Ueda&#8217;s comments. With inflation pressures gradually building and the yen having faced sustained weakness, any hint that the BOJ is preparing to raise rates more quickly could trigger a sharp appreciation in the yen. Conversely, if policymakers emphasize caution and downplay the need for additional tightening, the yen could come under renewed selling pressure.<\/p>\n\n\n\n<p><br \/><strong>Central Bank Notes:<\/strong><\/p>\n\n\n\n<ul>\n<li>The Policy Board of the Bank of Japan maintained the short-term policy rate at 0.75% at the 15\u201316 June 2026 meeting, in line with market expectations, while reiterating a cautious and data-dependent approach to further policy normalization amid mixed domestic and external conditions.<\/li>\n\n\n\n<li>The BOJ continues to target the uncollateralized overnight call rate around 0.75%, with policymakers signaling that any move toward 1.0% will depend on sustained wage growth, inflation durability above target, stable financial conditions, and limited downside risks to growth rather than a fixed tightening schedule.<\/li>\n\n\n\n<li>JGB purchase tapering remains on track, with monthly bond buying continuing to moderate under the previously announced framework. The BOJ maintains flexibility to intervene or temporarily adjust purchase operations if sharp volatility emerges in the Japanese government bond market or if excessive yen fluctuations threaten financial stability.<\/li>\n\n\n\n<li>Japan\u2019s economy shows moderate but uneven growth heading into mid-2026, supported by resilient domestic demand, corporate investment, and recovering external activity, although weaker global manufacturing momentum and geopolitical tensions continue to weigh on the export outlook.<\/li>\n\n\n\n<li>Core CPI (excluding fresh food) remains near the mid-1% y\/y range, while underlying inflation indicators, including core-core measures and services inflation, continue to hover around or above 2%, supported by stronger wage dynamics and pass-through effects from prior cost increases.<\/li>\n\n\n\n<li>Domestic inflation pressures remain supported by 2026 Shunto wage settlements near 5%, labor shortages, and firm services pricing. However, easing import costs and stabilizing commodity prices are helping moderate headline inflation, while risks persist from renewed energy volatility and yen depreciation.<\/li>\n\n\n\n<li>Near-term real GDP growth may remain below trend, reflecting the lagged impact of tighter financial conditions and external uncertainty, but rising household incomes, accommodative real rates, and fiscal support measures are expected to gradually support consumption and business investment.<\/li>\n\n\n\n<li>Over the medium term, the BOJ continues to expect that labor-market tightness, wage growth, and structural productivity improvements will help sustain inflation around the 2% target, leaving room for a gradual move toward 1.0% policy rates into late-2026 or 2027, provided inflation and economic momentum remain aligned.<\/li>\n\n\n\n<li>The next meeting is on 30 to 31 July 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><\/p>\n\n\n\n<p>Weak Bearish<\/p>\n\n\n\n<p><strong>Oil<\/strong><\/p>\n\n\n\n<p><strong>Key news events today<\/strong><br \/><br \/>No major news event<\/p>\n\n\n\n<p><strong>What can we expect from Oil today?<\/strong><\/p>\n\n\n\n<p>Oil enters Friday in a highly volatile environment where geopolitical headlines remain the primary catalyst. While concerns over the Middle East continue to provide strong support for crude prices, the absence of a major interruption to global oil flows has encouraged some profit-taking after this week&#8217;s rally. Traders will closely monitor today&#8217;s BOJ decision, Eurozone inflation figures, and U.S. economic releases for clues on global demand and the direction of the U.S. dollar.<br \/><br \/><strong>Next 24 Hours Bias<\/strong><strong><br \/><\/strong>Weak Bullish<\/p>\n\n\n\n<p><strong>Risk Warning:<\/strong>&nbsp;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&nbsp;<a href=\"https:\/\/cdn.ic.com\/uploads\/FSA\/Risk_Disclosure_Notice_FSA.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Risk Disclosure<\/a>.<\/p>\n\n\n\n<p>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<\/p>\n","protected":false},"excerpt":{"rendered":"<p>IC &#8211; Asia Fundamental Forecast | 31 July 2026 What happened [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":84953,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[196,215,339],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/posts\/88540"}],"collection":[{"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/comments?post=88540"}],"version-history":[{"count":2,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/posts\/88540\/revisions"}],"predecessor-version":[{"id":88574,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/posts\/88540\/revisions\/88574"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/media\/84953"}],"wp:attachment":[{"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/media?parent=88540"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/categories?post=88540"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/tags?post=88540"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}