What happened in the U.S. session?
The US trading session on September 11, 2025, was characterized by a “goldilocks” scenario for risk assets – inflation came in as expected without major upside surprises, while labor market data showed clear softening that supports Federal Reserve easing. This combination drove equity markets to fresh records while sending Treasury yields to multi-month lows and weakening the US dollar. The Oracle earnings afterglow continued to support tech sentiment, while defensive assets like gold maintained their elevated levels amid ongoing geopolitical uncertainties and expectations for sustained monetary accommodation.
What does it mean for the Asia Session?
Friday’s session will be characterized by light Asian economic data flow, allowing markets to consolidate recent gains driven by Fed rate cut certainty. Key focus areas include UK GDP data for insights into economic resilience, Japan’s industrial production for manufacturing sector health, and China’s credit data for monetary policy effectiveness. The overall sentiment remains positive, supported by accommodative central bank policies, though traders should monitor any shifts in rate cut expectations or geopolitical developments that could impact the prevailing risk-on mood.
The Dollar Index (DXY)
Friday’s dollar weakness reflects the convergence of dovish Fed expectations, persistent labor market softening, and relative strength in other major currencies. While August inflation showed some acceleration, markets remain focused on employment weakness as the primary driver for Fed policy. The dollar’s bearish trend remains intact, with the DXY targeting lower support levels around 96.50-97.00 unless significant data surprises shift the narrative.
Central Bank Notes:
● The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25% to 4.50% at its meeting on July 29–30, 2025, keeping policy unchanged for the fifth consecutive meeting.
● The Committee reiterated its objective of achieving maximum employment and inflation at the rate of 2% over the longer run. While uncertainty around the economic outlook has diminished since earlier in the year, the Committee notes that challenges remain and continued vigilance is warranted.
● Policymakers remain highly attentive to risks on both sides of their dual mandate. The unemployment rate remains low, near 4.2%–4.5%, and labor market conditions are described as solid. However, inflation remains somewhat elevated, with the PCE price index at 2.6% and a core inflation forecast of 3.1% for year-end 2025, up from earlier projections; tariff-related pressures are cited as a contributing factor.
● The Committee acknowledged that recent economic activity has expanded at a solid pace, with second-quarter annualized growth estimates near 2.4%. However, GDP growth for 2025 has been revised downward to 1.4% (from 1.7% projected in March), reflecting expectations of a slowdown in the coming quarters
● In the revised Summary of Economic Projections, the unemployment rate is expected to average 4.5% in 2025, and headline PCE inflation is forecast at 3.0% for the year, with core PCE at 3.1%. Policymakers continue to anticipate that inflation will moderate gradually, with ongoing risks from tariffs and global conditions.
● The Committee reaffirmed its data-dependent and risk-aware approach to future policy decisions. Officials stated they are prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede progress toward the Fed’s goals.
● As previously outlined, the Committee continues the measured run-off of its securities holdings. The pace of balance sheet reduction, which slowed since April (monthly redemption cap on Treasury securities reduced from $25B to $5B, while holding agency MBS cap steady at $35B), was left unchanged this month to support orderly market functioning and financial conditions.
● The next meeting is scheduled for 16 to 17 September 2025.
Next 24 Hours Bias
Weak Bearish
Gold (XAU)
Gold’s performance on Friday, September 12, 2025, reflects a confluence of powerful bullish factors that have driven the metal to historic heights. The combination of dovish Federal Reserve expectations, persistent geopolitical tensions, robust central bank buying, and concerns about monetary policy independence has created an exceptionally supportive environment for precious metals.
Next 24 Hours Bias
Strong Bullish
The Australian Dollar (AUD)
With no major Australian data releases, AUD will likely track broader risk sentiment and commodity prices. The currency may remain range-bound ahead of next week’s potential RBA policy signals, with traders focusing on any spillover effects from U.S. economic data and DXY movements around the 100 level.
Central Bank Notes:
● The RBA held its cash rate steady at 3.60% at its September meeting on 8–9 September 2025, following a 25 basis point reduction at the August meeting. This maintains a cautious yet supportive stance, with the decision largely anticipated given recent evidence of inflation settling within the target band.
● Inflation readings continue to ease, with headline CPI most likely tracking near 2.1–2.3%—comfortably within the 2–3% target range. September quarter figures are pending, but leading indicators show further moderation in non-housing components, even as insurance and housing-related costs remain sticky.
● The RBA’s preferred trimmed mean inflation is estimated at around 2.7%–2.9%, further reflecting progress toward the midpoint of the target range. Energy and food volatility still create some short-term uncertainty, but underlying inflation is broadly on track.
● Global conditions are a key source of risk. While U.S.–EU trade tensions have stabilized slightly, volatility in equities and commodities persists, with uncertainty feeding through to Australia’s trade and export outlook.
● Domestic demand shows tentative improvement. Real household incomes and a stabilizing housing sector have underpinned modest consumption growth, though business investment remains uneven—service sectors outperforming manufacturing and construction.
● Labor market tightness persists, but momentum continues to slow from earlier in the year. Employment gains remain, but job vacancies and hiring intentions have softened, with underutilization rising marginally for the second straight month.
● Wage growth has slowed in line with easing labour pressures, but unit labour costs remain elevated due to weak productivity. The RBA continues to flag subdued productivity as a medium-term cost risk.
● Forward indicators suggest household consumption may be softer than previously forecast. Elevated rents and high borrowing costs are dampening discretionary spending, despite modest income recovery.
● The Board continues to highlight the risk that household spending could underperform, potentially weighing on business investment and job creation if confidence remains subdued.
● Monetary policy remains mildly restrictive, in line with greater inflation control and ongoing economic rebalancing. The decision to hold rates recognizes both progress and ongoing uncertainties, with future moves explicitly tied to incoming data.
● The Reserve Bank reinforced its goals of price stability and full employment, stating readiness to adjust policy if economic or inflation outcomes diverge from baseline projections.
● The next meeting is on 29 to 30 September 2025.
Next 24 Hours Bias
Medium Bullish
The Kiwi Dollar (NZD)
The NZD remains under pressure due to weak domestic manufacturing, subdued growth, and a dovish RBNZ, which is set to cut rates further if inflation remains contained.
Any further softness from the global economy, especially China, or a major shift in US Fed policy, will continue to shape near-term NZD direction. Technical levels show possible support just above 0.5930 and mild resistance towards 0.60, with further moves likely reacting to US and New Zealand macroeconomic data releases.
Central Bank Notes:
● The Monetary Policy Committee (MPC) agreed to cut the Official Cash Rate (OCR) by 25 basis points to 3.00% on 20 August 2025, marking a three-year low and continuing the easing cycle after July’s pause. The vote was split 4-2, with two members advocating a 50-basis-point cut, highlighting diverging views within the Committee.
● Policymakers indicated that significant uncertainty and a stalling economic recovery prompted this move, leaving the door open for further rate cuts later in the year, with a possible trough around 2.5% by December.
● Annual consumer price index inflation rose to 2.7% in the June quarter and is expected to reach 3% for the September quarter—at the upper end of the MPC’s 1 to 3% target band—but medium-term expectations remain anchored near the 2% midpoint.
● Despite the near-term uptick, headline inflation is projected to return toward 2% by mid-2026, as tradables inflation pressures ease and significant spare capacity continues to dampen domestic price momentum.
● Domestic financial conditions are broadly aligning with MPC expectations, as lower wholesale rates have translated into reduced borrowing costs for households. However, declining consumption and investment demand, higher unemployment, and subdued wage growth reflect ongoing economic slack.
● GDP growth stalled in the second quarter of 2025, contrasting with earlier projections. High-frequency indicators point to continued weakness driven by rising prices for essentials, weakening household savings, and constrained business lending.
● The MPC cautioned that ongoing global tariff uncertainties and policy shifts, especially recent changes in US trade regulations, could amplify market volatility and present both upside and downside risks to New Zealand’s recovery.
● Subject to medium-term inflation pressures continuing to ease as projected, the MPC signaled scope for further OCR cuts, possibly down to 2.5% by year-end, consistent with the latest Monetary Policy Statement outlook.
● The next meeting is on 22 October 2025.
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
The Japanese yen faces a complex environment on September 12, 2025, with political uncertainty from Prime Minister Ishiba’s resignation weighing on the currency despite improving economic fundamentals. While the Bank of Japan is expected to hold rates steady at its upcoming September 19 meeting, the door remains open for a rate hike later in 2025, contingent on economic conditions and political stability. The combination of solid economic data, improved business sentiment from the US trade deal, and cautious BoJ policy normalization suggests the yen may find support, though political developments will remain a key risk factor in the near term.
Central Bank Notes:
● The Policy Board of the Bank of Japan decided on 31 July, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
● The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
● The BOJ will maintain its gradual reduction of monthly outright purchases of Japanese Government Bonds (JGBs). The scheduled amount of long-term government bond purchases will, in principle, continue to decrease by about ¥400 billion each quarter from January to March 2026, and by about ¥200 billion each quarter from April to June 2026 onward, targeting a purchase level near ¥2 trillion in January to March 2027.
● Japan’s economy is experiencing a moderate recovery overall, though some sectors remain sluggish. Overseas economies are generally growing moderately, but recent trade policies in major economies have introduced pockets of weakness. Exports and industrial production in Japan are essentially flat, with any uptick largely driven by front-loaded demand ahead of U.S. tariff increases.
● On the price front, the year-on-year rate of change in consumer prices (excluding fresh food) remains in the mid-3% range. This reflects continued wage pass-through, previous import cost surges, and further increases in food prices, particularly rice. Expectations for future inflation have begun to rise moderately.
● The effects of the earlier import price and food cost increases are expected to fade during the outlook period. There may be a temporary stagnation in core inflation as overall growth momentum softens.
● Looking forward, the economy is likely to see a slower growth pace in the near term as overseas economies feel the pinch of ongoing global trade policies, putting downward pressure on Japanese corporate profits. Accommodative financial conditions are expected to buffer these headwinds somewhat. In the medium term, as global growth recovers, Japan’s growth rate is also expected to improve.
● With renewed economic expansion, intensifying labor shortages, and a steady rise in medium- to long-term expected inflation rates, core inflation is projected to gradually pick up. By the latter half of the BOJ’s projection period, inflation is forecast to move in line with the 2% price stability target.
● The next meeting is scheduled for 17 to 18 September 2025.
Next 24 Hours Bias
Weak Bearish
Oil
The oil market on September 12, 2025, is characterized by a fundamental shift toward oversupply concerns overriding geopolitical risk premiums. While tensions in Eastern Europe and the Middle East continue to provide some price support, the combination of OPEC+ production increases, upgraded supply forecasts, unexpected US inventory builds, and signs of demand weakness has driven prices sharply lower.
Next 24 Hours Bias
Medium Bullish
Source: IC Markets
IC Markets
