{"id":89649,"date":"2026-09-04T17:25:38","date_gmt":"2026-09-04T07:25:38","guid":{"rendered":"https:\/\/ic.com\/blog\/?p=89649"},"modified":"2026-09-04T17:25:39","modified_gmt":"2026-09-04T07:25:39","slug":"ic-europe-fundamental-forecast-04-september-2026","status":"publish","type":"post","link":"https:\/\/ic.com\/blog\/ic-europe-fundamental-forecast-04-september-2026\/","title":{"rendered":"IC &#8211; Europe Fundamental Forecast | 04 September 2026"},"content":{"rendered":"\n<p><strong>IC &#8211; Europe Fundamental Forecast | 04 September 2026<\/strong><strong><br \/><\/strong><\/p>\n\n\n\n<p><strong>What happened in the Asia session?<\/strong><strong><br \/><\/strong><strong><br \/><\/strong>Asian equities are benefiting from lower U.S. rate-hike expectations and the rebound in technology stocks, while the yen is the standout currency, gaining strongly on expectations of a more hawkish BOJ. South Korea&#8217;s exceptionally large current-account surplus is supporting the won, while the RBNZ&#8217;s latest 25 bp hike continues to underpin the NZD.<br \/><br \/>At the same time, oil remains strongly bullish above $96 Brent as U.S.\u2013Iran tensions threaten Middle Eastern supply routes. The major catalyst still ahead is the U.S. jobs report, which could determine whether the dollar&#8217;s current weakness extends into the European and U.S. sessions.<br \/><br \/><strong>What does it mean for the Europe &amp; US sessions?<\/strong><strong><br \/><\/strong><br \/>Markets are entering the session with reduced expectations for a September Fed rate hike after Waller signaled that continued disinflation could justify holding rates steady. A weak NFP\/wage combination would likely reinforce USD selling and support gold, while a strong employment and wage report could quickly revive Fed-hike expectations and strengthen the dollar. At the same time, Canadian employment data will create significant volatility in CAD pairs, while Bailey&#8217;s speech and ongoing U.S.-Iran tensions provide additional catalysts for GBP and oil.<br \/><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>Average Hourly Earnings m\/m (12:30 pm GMT)<br \/><br \/>Non-Farm Employment Change (12:30 pm GMT)<br \/><br \/>Unemployment Rate (12:30 pm GMT)<br \/><br \/><strong>What can we expect from DXY today?<\/strong><\/p>\n\n\n\n<p>The dollar is being pressured by falling Fed-hike expectations after Waller&#8217;s dovish comments, while recent employment indicators point toward a slowing labor market. However, today&#8217;s NFP, unemployment rate, and wage data could quickly reverse the move.<br \/><br \/><em>Central Bank Notes:<\/em><\/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&nbsp; September 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><br \/>Medium Bullish<\/p>\n\n\n\n<p><strong>Gold (XAU)<\/strong><strong><br \/><\/strong><strong><br \/><\/strong><strong>Key news events today<\/strong><strong><br \/><\/strong><strong><br \/><\/strong>Average Hourly Earnings m\/m (12:30 pm GMT)<\/p>\n\n\n\n<p>Non-Farm Employment Change (12:30 pm GMT)<\/p>\n\n\n\n<p>Unemployment Rate (12:30 pm GMT)<\/p>\n\n\n\n<p><strong>What can we expect from Gold today?<\/strong><strong><br \/><\/strong><strong><br \/><\/strong>Gold is being supported by a weaker dollar, falling Treasury yields, reduced Fed rate-hike expectations, and geopolitical uncertainty. The biggest event today is the U.S. jobs report. With the market expecting only 55K new jobs, a weak result could provide another strong upside catalyst for gold, while a significantly stronger report could trigger a sharp pullback.<\/p>\n\n\n\n<p><strong>Next 24 Hours Bias&nbsp; &nbsp; <\/strong><strong><br \/><\/strong>Medium Bullish<\/p>\n\n\n\n<p><strong>The Euro (EUR)<\/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 EUR toda<\/strong>y?<br \/><br \/>The euro remains fundamentally supported by expectations of another ECB rate hike, while the softer U.S. dollar is providing additional upside potential for EUR\/USD. However, today&#8217;s U.S. NFP report is likely to dominate price action. A weak U.S. employment reading could reinforce <a href=\"https:\/\/www.tradingview.com\/symbols\/EURUSD\/?exchange=ICMARKETS\" title=\"\">EUR\/USD <\/a>bullish momentum, while a strong jobs report could trigger a sharp dollar rebound and push the euro lower. The key theme today is therefore ECB hawkishness versus U.S. employment strength.<\/p>\n\n\n\n<p><br \/><em>Central Bank Notes:<\/em><\/p>\n\n\n\n<ul>\n<li>The Governing Council kept all three key interest rates unchanged at its 22\u201323 July meeting, maintaining the deposit facility at 2.25%, the main refinancing operations rate at 2.40%, and the marginal lending facility at 2.65%. The ECB reiterated that monetary policy will remain meeting-by-meeting and data-dependent, with no pre-commitment to a future rate path.<\/li>\n\n\n\n<li>The euro area economy continues to expand at a modest pace, with growth expected to remain below trend but resilient. While domestic demand and the labor market continue to provide support, elevated uncertainty, higher energy prices, and weaker external demand are expected to limit the pace of expansion through the second half of 2026.<\/li>\n\n\n\n<li>Balance-sheet normalization continues as planned. The APP and PEPP portfolios continue to decline predictably as the Eurosystem no longer reinvests maturing securities. The ECB has indicated that liquidity conditions remain orderly and that it stands ready to preserve the smooth transmission of monetary policy if necessary.<\/li>\n\n\n\n<li>Inflation risks remain tilted to the upside. Renewed volatility in oil and natural gas prices following geopolitical tensions in the Middle East could keep headline inflation above the ECB&#8217;s 2% target for longer. Policymakers are closely monitoring the persistence of energy-driven inflation, wage developments, and any potential second-round effects.<\/li>\n\n\n\n<li>The ECB is expected to maintain a cautious policy stance into August. Future policy decisions will continue to depend on incoming inflation data, wage growth, underlying inflation measures, credit conditions, and the effectiveness of monetary policy transmission. While markets see the possibility of further tightening later in the year if inflation remains persistent, the ECB has not committed to additional rate increases.<\/li>\n\n\n\n<li>For the euro (EUR), the outlook remains balanced. Stable ECB policy provides support, but renewed energy-price shocks and global risk sentiment may generate two-way volatility. The euro could strengthen if euro-area inflation remains sticky or economic data outperform expectations, while weaker growth or a more hawkish Federal Reserve could weigh on the currency.<\/li>\n\n\n\n<li>Euro-area bond markets are expected to remain sensitive to inflation expectations and geopolitical developments. Front-end yields should remain relatively anchored while the ECB stays on hold, whereas longer-dated yields will continue to respond to energy-price developments, inflation expectations, and global risk sentiment.<\/li>\n<\/ul>\n\n\n\n<p>\u200bThe next meeting is on 9 to 10 September 2026<\/p>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><br \/>Medium Bullish<\/p>\n\n\n\n<p><strong>The Swiss Franc (CHF)<\/strong><strong><br \/><\/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 CHF today?<\/strong><strong><br \/><\/strong><br \/>Stronger Swiss inflation and economic growth are improving the case for eventual SNB tightening, while recent dollar weakness is providing additional support. However, the SNB&#8217;s ultra-loose policy and potential FX intervention remain important constraints. For forex traders, USD\/CHF is particularly sensitive today to the U.S. NFP release; a weaker-than-expected jobs number could reinforce CHF strength, while a strong payrolls figure could trigger a USD\/CHF rebound.<br \/><br \/><em>Central Bank Notes:<\/em><\/p>\n\n\n\n<ul>\n<li>At its monetary policy assessment on 18 June 2026, the Swiss National Bank left the SNB policy rate unchanged at 0.00%, in line with market expectations. Policymakers maintained that the current policy setting remains appropriate given low inflation and ongoing global economic uncertainty.<\/li>\n\n\n\n<li>Inflation remains exceptionally subdued in Switzerland. Recent data show consumer price growth staying comfortably within the SNB&#8217;s price stability range, with headline inflation around 0.6% year-on-year in May 2026, while underlying inflation pressures remain limited despite higher global energy prices.<\/li>\n\n\n\n<li>The SNB continues to view medium-term inflation pressures as largely unchanged. While energy prices linked to Middle East tensions have temporarily lifted near-term inflation expectations, the stronger Swiss franc has helped offset imported inflation, supporting the central bank&#8217;s decision to maintain rates at current levels.<\/li>\n\n\n\n<li>External risks remain elevated. Policymakers highlighted ongoing geopolitical tensions, trade uncertainties, and slower global growth prospects, particularly in key export markets such as the Eurozone and the United States. These factors continue to warrant a cautious policy approach.<\/li>\n\n\n\n<li>Swiss economic activity remains resilient but modest. GDP growth is expected to remain around 1\u20131.5% in 2026, supported by domestic demand, although manufacturing and export-oriented sectors continue to face challenges from a strong franc and softer foreign demand.<\/li>\n\n\n\n<li>The SNB reiterated its readiness to act if necessary. The Governing Board emphasized that it remains willing to intervene in foreign exchange markets to counter excessive Swiss franc appreciation and stands prepared to adjust policy should inflation or economic conditions deviate materially from expectations.<\/li>\n<\/ul>\n\n\n\n<p><br \/>The next meeting is on 24 September 2026.<\/p>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><br \/>Medium Bullish<\/p>\n\n\n\n<p><strong>The Pound (GBP)<\/strong><strong><br \/><\/strong><strong><br \/><\/strong><strong>Key news events today<\/strong><\/p>\n\n\n\n<p>BOE Gov Bailey Speaks (8:50 am GMT)<\/p>\n\n\n\n<p><strong>What can we expect from GBP today?<br \/><br \/><\/strong>Sterling is starting Friday on relatively firm footing, supported by resilient UK growth and growing expectations that the BoE may need to keep rates higher for longer. However, today&#8217;s Bailey speech and U.S. jobs report could determine the next major <a href=\"https:\/\/www.tradingview.com\/symbols\/GBPUSD\/?exchange=ICMARKETS\" title=\"\">GBP\/USD <\/a>move, so traders should expect heightened volatility around these events.<\/p>\n\n\n\n<p><em>Central Bank Notes:<\/em><\/p>\n\n\n\n<ul>\n<li>The Bank of England\u2019s Monetary Policy Committee (MPC) met on 29\u201330 July 2026, with the decision and updated Monetary Policy Report scheduled for publication on 30 July. The previous meeting in June resulted in a 7\u20132 vote to maintain the Bank Rate at 3.75%, with Megan Greene and Huw Pill voting for a 25-basis-point increase to 4.00%. The July meeting is particularly important because it includes a new Monetary Policy Report and updated economic projections.<\/li>\n\n\n\n<li>UK inflation has continued to move closer to the Bank\u2019s 2% target. CPI inflation fell to 2.6% in June 2026, from 2.8% in May, while core CPI remained at 2.6%. Services inflation also eased from 3.7% to 3.6%, suggesting that underlying domestic price pressures are gradually moderating. Nevertheless, services inflation remains above the 2% target and continues to be an important consideration for the MPC.<\/li>\n\n\n\n<li>The inflation outlook remains complicated by energy-market developments. The earlier Middle East energy shock pushed inflation higher and created uncertainty around the speed at which inflation would return sustainably to target. Although energy prices have fallen from their earlier peaks, they remain elevated relative to pre-conflict levels. The MPC therefore continues to monitor the potential for energy costs to feed into wages, services prices and inflation expectations.<\/li>\n\n\n\n<li>The UK economy remains relatively subdued, with weak demand and signs of cooling in the labour market weighing against the upside inflation risks. The combination of slower economic activity and easing inflation creates a difficult policy balance for the MPC: keeping rates restrictive for too long could weaken growth further, while easing policy prematurely could allow persistent domestic inflation pressures to return.<\/li>\n\n\n\n<li>Wage growth and services inflation remain key risks for monetary policy. Although headline CPI has fallen substantially from earlier 2026 levels, the MPC is likely to remain cautious until there is greater evidence that domestic inflation pressures are sustainably declining. The moderation in services inflation to 3.6% is encouraging, but it remains above levels consistent with the Bank\u2019s 2% inflation target.<\/li>\n\n\n\n<li>Quantitative tightening (QT) remains part of the Bank\u2019s broader monetary-policy framework. The MPC continues reducing the stock of UK government bonds held for monetary-policy purposes through its balance-sheet reduction programme. At the June meeting, the stock of government bonds held for monetary-policy purposes stood at approximately \u00a3522 billion.<\/li>\n\n\n\n<li>The policy outlook remains highly data-dependent. With inflation moving lower but services inflation and wage pressures still elevated, the MPC faces a delicate balance between maintaining sufficiently restrictive policy and avoiding unnecessary damage to economic growth. Market participants had previously placed substantial probability on the Bank Rate remaining at 3.75% through the July meeting, although expectations for later meetings showed greater uncertainty, including the possibility of rate increases if inflation proves persistent.<\/li>\n\n\n\n<li>The next meeting is on 17 September 2026.<br \/><br \/><strong>Next 24 Hours Bias<\/strong><strong><br \/><\/strong>Medium Bearish<\/li>\n<\/ul>\n\n\n\n<p><strong><br \/><\/strong><strong><br \/><\/strong><strong>The Canadian Dollar (CAD)<\/strong><strong><br \/><\/strong><strong><br \/><\/strong><strong>Key news events today<\/strong><strong><br \/><\/strong><strong><br \/><\/strong>Employment Change (12:30 pm GMT)<\/p>\n\n\n\n<p>Unemployment Rate (12:30 pm GMT)<\/p>\n\n\n\n<p>Ivey PMI (2:00 pm GMT)<\/p>\n\n\n\n<p><strong>What can we expect from CAD today?<\/strong><\/p>\n\n\n\n<p>The BoC&#8217;s increasingly cautious\/hawkish inflation stance, strong oil prices and a softer U.S. dollar are supporting the loonie. The biggest immediate risk is the Canadian employment report, where markets are looking for only 15.1K new jobs with unemployment holding at 6.4%. A stronger-than-expected jobs number could extend CAD gains, while a weak release could send USD\/CAD back higher.<br \/>\u200b<br \/>Central Bank Notes:<\/p>\n\n\n\n<ul>\n<li>At its 2 September 2026 meeting, the Bank of Canada maintained the overnight rate target at 2.25%, keeping the Bank Rate at 2.50% and the deposit rate at 2.20%. This marks the seventh consecutive decision at 2.25%. While the decision was expected, the Bank\u2019s communication became somewhat more cautious as inflation risks increased. Governor Tiff Macklem emphasized that the Bank remains prepared to adjust monetary policy if necessary to preserve price stability.<\/li>\n\n\n\n<li>The Canadian economy has strengthened significantly in the second quarter. GDP expanded at an annualized rate of 3.3% in Q2 2026, following very weak growth in Q1. The recovery was relatively broad-based, with consumer spending remaining resilient while housing activity, exports and business investment also improved. However, the Bank noted that some of the Q2 strength reflected temporary factors and that the sustainability of the recovery remains uncertain because of renewed trade tensions with the United States.<\/li>\n\n\n\n<li>The labour market has continued to improve, providing additional support for domestic demand. Employment increased by 75,000 in July, while the unemployment rate declined to 6.4%, its lowest level since July 2024. Wage growth, however, continued to moderate, with average hourly wages rising 2.8% year over year in July compared with 3.3% in June. The combination of stronger employment and moderating wages suggests that labour-market conditions are improving without generating an immediate resurgence in underlying inflation pressures.<\/li>\n\n\n\n<li>Inflation remains the key concern for the Bank. Headline CPI increased to 3.0% year over year in July, up from 2.8% in June. Much of the acceleration was driven by gasoline, with gasoline prices rising 25.7% year over year. Encouragingly, CPI excluding gasoline remained at 2.2%, while core inflation measures have stayed close to 2%. The Bank therefore continues to distinguish between temporary energy-driven inflation and more persistent underlying price pressures.<\/li>\n\n\n\n<li>Higher global oil prices have increased the upside risks to Canadian inflation. The continuing conflict in the Middle East, restrictions affecting shipments through the Strait of Hormuz and elevated refinery margins have kept gasoline and other energy prices high. The Bank is currently looking through some of the direct impact of higher oil prices, but Governor Macklem warned that the longer energy prices remain elevated, the greater the risk that inflation becomes more persistent and spreads into other goods and services.<\/li>\n\n\n\n<li>US-Canada trade tensions have become a more significant downside risk to growth. New US tariffs on Canadian exports and Canada&#8217;s retaliatory measures are creating additional uncertainty for businesses. The Bank estimates that the products directly affected by the new tariffs account for around 5% of Canada&#8217;s exports to the United States, limiting the immediate economy-wide impact. Nevertheless, broader uncertainty could cause businesses to delay investment and hiring decisions, potentially slowing the recovery.<\/li>\n\n\n\n<li>The Bank&#8217;s policy stance remains data-dependent going into October. The BoC is balancing two opposing forces: stronger-than-expected economic activity and renewed inflation risks on one side, versus excess economic capacity and trade-related downside risks on the other. With inflation around 3% but underlying inflation closer to 2%, the Bank has so far chosen to remain on hold rather than immediately tighten policy.<\/li>\n\n\n\n<li>The next meeting is on 28 October 2026.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next 24 Hours Bias<\/strong><br \/>Medium Bullish<\/p>\n\n\n\n<p><strong>Oil<\/strong><strong><br \/><\/strong><strong><em><br \/><\/em><\/strong><strong>Key news events today<\/strong><\/p>\n\n\n\n<p>No major news event<br \/><strong><br \/><\/strong><strong>What can we expect from Oil today?<\/strong><\/p>\n\n\n\n<p>Oil enters Friday with Brent near $96 and WTI near $92. Geopolitical tensions are keeping supply fears elevated, while a much larger-than-expected U.S. inventory draw is reinforcing the upside. However, prices are approaching psychologically important levels around $97\u2013$100 Brent, so expect significant volatility around today&#8217;s U.S. jobs data.<br \/><br \/><strong>Next 24 Hours Bias<br \/><\/strong>Medium 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\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>IC &#8211; Europe Fundamental Forecast | 04 September 2026 What happened [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":84955,"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\/89649"}],"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=89649"}],"version-history":[{"count":3,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/posts\/89649\/revisions"}],"predecessor-version":[{"id":89674,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/posts\/89649\/revisions\/89674"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/media\/84955"}],"wp:attachment":[{"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/media?parent=89649"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/categories?post=89649"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ic.com\/blog\/wp-json\/wp\/v2\/tags?post=89649"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}