IC Trading Europe Fundamental Forecast | 11 August 2025
What happened in the Asia session?
The Asia session on August 11, 2025, was characterized by cautious equity gains mainly in tech shares, mixed commodity moves, and currency markets treading water ahead of pivotal macro events later this week. Oil, gold, tech equities, and chip stocks were the most reactive instruments, with headline risk from tariffs, U.S. inflation, and central bank decisions dominating market direction.
Equities traded slightly higher, guided by optimistic corporate earnings in the tech sector. The MSCI Asia-Pacific ex-Japan index rose 0.1%. However, overall trading was subdued as investors awaited the U.S.–China tariff truce deadline set for August 12 and key U.S. inflation data due on Tuesday.
What does it mean for the Europe & US sessions?
Today, traders should focus on market positioning and headline-driven moves rather than scheduled economic data, while keeping close tabs on commodities, risk assets, and potential policy surprises from central banks and governments. U.S. and Japanese stock markets ended last week on record highs, primarily boosted by a surge in tech stocks. European indices were mixed, with the STOXX 600 closing 0.3% higher on Friday, supported by reports of potential progress in U.S.–Russia peace talks over Ukraine.
The Dollar Index (DXY)
Key news events today
No major news event
What can we expect from DXY today?
The dollar is trading cautiously ahead of major US inflation data and the US-China tariff deadline, with market sentiment shaped by expectations of further rate cuts and global trade negotiations. The dollar index (DXY) held at 98.25, nearly unchanged for the day, following a 0.4% drop last week. The index has declined by 4.88% over the past 12 months. Recent months have seen muted volatility as markets expect further rate cuts from the Federal Reserve, especially with softening labor market data and political changes at the Fed contributing to uncertainty.
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 the July 29–30, 2025, meeting, 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 is still somewhat elevated, with the PCE price index at 2.6% and core inflation forecast at 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)
Key news events today
No major news event
What can we expect from Gold today?
Gold remains sensitive to macroeconomic shifts, with its fortunes closely tied to the U.S. interest rate outlook, inflation data, and political headlines. Today’s dip reflects a temporary easing in global tensions rather than a fundamental change in its role as a hedge or investment vehicle. Spot gold slipped 0.7% to $3,376.67 per ounce as of early Monday trading, retreating from Friday’s peak—the highest since July 23. U.S. gold futures for December delivery dropped 1.5% to $3,439.70 an ounce.
Next 24 Hours Bias
Weak Bullish
The Euro (EUR)
Key news events today
No major news event
What can we expect from EUR today?
The Euro is holding steady to slightly stronger against the USD at the start of the week. Economic growth forecasts remain muted, and geopolitical risks, especially the Ukraine conflict, are at the forefront with major diplomatic meetings planned. The ECB is expected to pursue careful monetary easing amidst declining inflation and persistent uncertainty.EUR/USD exchange rate stands at approximately 1.1673 as of August 11, 2025, representing a modest increase (+0.28%) from the previous session. Over the past week, the Euro has experienced a relatively stable performance, with a slight upward trend (about +0.76% change over seven days).
Central Bank Notes:
- The Governing Council kept the three key ECB interest rates unchanged at its July 24 meeting, maintaining the main refinancing rate at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%, following eight consecutive cuts preceding this decision.
- The decision to hold rates steady was driven by evidence that inflation is stabilizing near the Governing Council’s medium-term target of 2%. Policymakers communicated that further moves on rates would be data-dependent, explicitly refraining from pre-committing to any future path amid persistent global and domestic uncertainties.
- According to the latest Eurosystem staff projections, headline inflation is expected to remain around 2.0% for 2025, with projections indicating 1.6% for 2026 and a rebound to 2.0% in 2027. Downward revisions from previous forecasts primarily reflect lower energy price assumptions and a stronger euro. Inflation excluding energy and food is seen averaging 2.4% in 2025 and 1.9% in 2026–2027, little changed from prior projections.
- Real GDP growth for the Eurozone is forecast at 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. The projections note that a strong first quarter offsets a weaker outlook for the rest of 2025. While business investment and exports are dampened by ongoing trade policy uncertainties—including recent U.S. tariff measures—rising government investment, particularly in defense and infrastructure, is expected to progressively underpin growth.
- Household spending should be supported by firm real income gains and a still-solid labour market. More favorable financing conditions are expected to help strengthen the economy’s resilience to further global shocks. Wage growth, although still elevated, continues to moderate, with profit margins partially absorbing cost pressures.
- Amid significant geopolitical and economic uncertainty, the Governing Council underscored its commitment to ensuring inflation stabilises sustainably at the 2% target. The ECB reiterated it would pursue a meeting-by-meeting, data-dependent approach to its monetary policy stance.
- Future rate decisions will be guided by the assessment of incoming economic and financial data, the outlook for inflation and underlying inflation dynamics, and the effectiveness of monetary policy transmission. The Council continues to stress that it is not pre-committed to any specific rate trajectory.
- The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are continuing to decline in an orderly and predictable way, as the Eurosystem has ceased reinvesting principal payments from maturing securities.
- The next meeting is on 11 September 2025
Next 24 Hours Bias
Weak Bullish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from CHF today?
The Swiss Franc remains relatively stable against major currencies but faces downward pressure due to new U.S. tariffs on key exports. Technical and market sentiment indicators suggest neutrality rather than a decisive trend. Swiss authorities are engaged in ongoing negotiations, but diplomatic relief on gold tariffs is elusive, keeping investors cautious about the currency’s safe-haven prospects. The Swiss Franc is trading at approximately $1.238 per 1 CHF, reflecting a stable exchange rate with minor fluctuations over the past week. The latest daily change is about +0.037%, and the CHF has appreciated 8.38% compared to a year ago, but remained flat week-on-week.
Central Bank Notes:
- The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.25% to 0% on 19 June 2025, marking the sixth consecutive reduction.
- Inflationary pressure has decreased further as compared to the previous quarter, decreasing from 0.3% in February to -0.1% in May, mainly attributable to lower prices in tourism and oil products.
- Compared to March, the new conditional inflation forecast is lower in the short term. In the medium term, there is hardly any change from March, putting the average annual inflation at 0.2% for 2025, 0.5% for 2026 and 0.7% for 2027.
- The global economy continued to grow at a moderate pace in the first quarter of 2025 but the global economic outlook for the coming quarters has deteriorated due to the increase in trade tensions.
- Swiss GDP growth was strong in the first quarter of 2025, but this development was largely because, as in other countries, exports to the U.S. were brought forward.
- Following the strong first quarter, growth is likely to slow again and remain rather subdued over the remainder of the year; the SNB expects GDP growth of 1% to 1.5% for 2025 as a whole, while also anticipating GDP growth of 1% to 1.5% for 2026.
- The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
- The next meeting is on 25 September 2025.
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
No major news event
What can we expect from GBP today?
The Pound is stable to moderately stronger today, reflecting cautious optimism from markets after the Bank of England’s latest move. The currency is supported by expectations of a policy pause and resilience in the face of recent economic headwinds, but traders remain sensitive to incoming data and evolving central bank messaging. The British Pound (GBP) traded at USD 1.3463, up 0.13% from the previous session, reaching its highest level in around two weeks. Over the past month, GBP has strengthened 0.27% and is up 5.42% year-on-year against the US dollar.
Central Bank Notes:
- The Bank of England’s Monetary Policy Committee (MPC) voted on 7 August 2025 by a majority (exact split likely 5–3–1 or similar, based on expectations) to cut the Bank Rate by 25 basis points to 4.00%. Multiple members supported the move, citing fragile economic growth and signs of disinflation, while others preferred a larger reduction, and at least one member voted to hold the rate steady due to concerns about persistent inflation.
- The Committee unanimously decided to continue reducing the stock of UK government bond purchases held for monetary policy purposes by £100 billion over the next 12 months, targeting a balance of £558 billion by October 2025. As of 7 August, the gilt stock stands at £590 billion.
- Disinflation has been substantial since 2023 owing to policy tightening and the fading of external shocks. However, an unexpected uptick in headline CPI inflation—to 3.6% in June—reflects pass-through from regulated prices and earlier energy price rises, as well as signs of sticky core inflation.
- Headline CPI inflation is now 3.6%, above the Bank’s 2% target, reflecting regulated and energy price effects. The Committee expects inflation to remain around this level through Q3 before resuming its downward trend into 2026.
- UK GDP growth remains weak. Business and consumer surveys point to lacklustre activity, and the labour market continues to loosen, with increasing evidence of slack. Wage growth has softened but remains above pre-pandemic norms.
- Pay growth and employment indicators have moderated further, and the Committee expects a significant slowing in pay settlements over the rest of 2025.
- Global uncertainty remains elevated, especially with rising energy prices and supply disruptions linked to conflict in the Middle East and renewed trade tensions. These factors prompt the MPC to remain vigilant in monitoring cost and wage shocks.
- The risks to inflation are considered two-sided. With the outlook for growth subdued and inflation persistence less clear, the Committee argues that a gradual and careful approach to further easing is warranted, with future policy decisions highly data-dependent.
- The Committee’s bias is still towards maintaining monetary policy at a restrictive stance until there is firmer evidence that inflation will return sustainably to the 2% target over the medium term. Further adjustments to policy will be decided on a meeting-by-meeting basis, with scrutiny of developments in demand, costs, and inflation expectations.
- The next meeting is on 18 September 2025.
Next 24 Hours Bias
Weak Bearish
The Canadian Dollar (CAD)
Key news events today
No major news event
What can we expect from CAD today?
The Canadian dollar is relatively stable but remains under pressure from weak jobs data, increased unemployment, commodity softness, and new US tariffs. Market watchers anticipate further volatility throughout the week, especially as investors await Bank of Canada policy signals and global economic developments. The Canadian dollar is trading at approximately 1.3749 per US dollar on August 11, 2025, representing a slight dip of 0.03% compared to the previous session. Over the past month, the loonie has weakened by 0.31%, and it is down by 0.06% over the past year.
Central Bank Notes:
- The Bank of Canada maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% as of July 30, marking the third consecutive meeting with rates on hold.
- The Council cited ongoing U.S. tariff adjustments and unresolved trade negotiations as driving factors for elevated economic uncertainty. The persistence of tariffs well above early-2025 levels continues to present downside risks for growth and keeps inflation expectations elevated, supporting a cautious approach to monetary easing.
- The lack of a clear U.S. policy path, plus frequent threats of additional tariffs, led the Bank to highlight risks to Canadian exports and broader demand, amplifying uncertainty about future growth.
- Canada’s economic growth in the first quarter came in at 2.2%, slightly stronger than the original forecast, while the composition of GDP growth was largely as expected. Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence.
- Canadian GDP growth is expected to be near 0% in Q2 2025, closely aligned with the more optimistic scenario outlined earlier in the year. Weakness in manufacturing activity—driven by both U.S. trade disruptions and sector-specific challenges like wildfires—contributed to softer output. A partial recovery is anticipated in Q3 due to rebuilding efforts and stronger retail sales in June.
- Consumer spending slowed, especially as households front-loaded durable goods purchases ahead of tariffs. Housing activity remains subdued, with resales and construction still soft despite some government tax relief measures.
- Headline CPI inflation continued to ease, holding close to 1.7% in June, aided by declines in energy prices following the removal of the fuel charge. However, the Bank’s measures of core inflation and underlying price pressures moved up further due to higher import costs from tariffs and lingering supply disruptions.
- The Governing Council reiterated it will carefully weigh ongoing upward inflation pressure from tariffs and cost shocks against the gradual downward pull from economic weakness. While additional rate cuts remain possible, timing and scale will depend on trade policy developments and inflation’s path..
- The next meeting is on 17 September 2025.
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No major news event
What can we expect from Oil today?
Oil markets are in a continued decline today due to a combination of rising OPEC+ production, ongoing geopolitical negotiations between the U.S. and Russia (with the potential to ease sanctions on Russian oil), and worries over weaker global economic growth driven by new U.S. tariffs. Market watchers are closely eyeing the Trump-Putin meeting, upcoming economic data, and fresh official industry analysis to determine whether prices will stabilize or fall further in the coming weeks.
Next 24 Hours Bias
Weak Bearish
