IC Markets – Europe Fundamental Forecast | 20 November 2025

IC Markets – Europe Fundamental Forecast | 21 November 2025

What happened in the Asia session?
Asian equities were broadly lower as Wall Street’s volatility spilled into the region, with technology stocks hit hardest. Market participants reacted to renewed worries about the Federal Reserve’s rate cut prospects, elevated inflation in Japan and Australia, and regional concerns around China’s property market and diplomatic tensions. Most impacted instruments included major Asian equity indices, tech stocks, the yen, and commodities, including oil and gold.

What does it mean for the Europe & US sessions?
Friday, November 21, 2025, presents traders with a data-heavy session dominated by flash PMI releases across major economies. The collapse in Federal Reserve rate cut expectations from near certainty to below 50% probability has fundamentally shifted market dynamics. Despite Nvidia’s stellar earnings, technology stocks remain under pressure from valuation concerns and fading rate cut hopes. European markets face headwinds from mixed economic signals,

The Dollar Index (DXY)

Key news events today

Flash Manufacturing PMI (2:45 pm GMT)

Flash Services PMI (2:45 pm GMT)

Revised UoM Consumer Sentiment (3:00 pm GMT)

What can we expect from DXY today?

The US Dollar traded near six-month highs around 100.20 on the DXY index, supported by dramatically reduced expectations for a December Fed rate cut (now just 32-33% probability versus 65% a week prior). The shift followed hawkish FOMC minutes revealing deep divisions within the Fed and Thursday’s mixed September jobs report showing 119,000 payroll gains but unemployment rising to 4.4%. Multiple Fed officials, including Hammack and Cook, warned about financial stability risks and inflation concerns, reinforcing the case for holding rates steady.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) voted, by majority, to lower the federal funds rate target range by 25 basis points to 3.75% — 4.00% at its October 28–29, 2025, meeting, marking the second consecutive cut following the 25 basis points reduction in September.
• The Committee maintained its long-term objectives of maximum employment and 2% inflation, noting that the labor market continues to soften, with modest job creation and an unemployment rate edging higher. In comparison, inflation remains above target at around 3.0%.
• Policymakers highlighted ongoing downside risks to economic growth, tempered by signs of resilient economic activity. September’s consumer price index (CPI) came in slightly lower than expected at 3.0% year-over-year, easing inflation pressure but still warranting vigilance given tariff-driven price effects.
• Economic activity expanded modestly in the third quarter, with GDP growth estimates around 1.0% annualized; however, uncertainty remains elevated amid persistent global trade tensions and the U.S. government shutdown, which is impacting data availability.
• The updated Summary of Economic Projections anticipates an unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections remaining near 3.0%, indicating a slow easing path ahead.
• The Committee emphasized its flexible, data-dependent approach and underscored that future policy adjustments will be guided by incoming labor market and inflation data. As in prior meetings, there was dissent, including one member advocating a more aggressive 50-basis-point cut.
• The FOMC announced the planned conclusion of its balance sheet reduction (quantitative tightening) program, intending to cease runoff in the near term to maintain market stability. Treasury redemption caps will remain steady at $5 billion per month, and agency mortgage-backed securities caps will remain at $35 billion.
• The next meeting is scheduled for 9 to 10 December 2025.

Next 24 Hours Bias
Weak Bullish

Gold (XAU)

Key news events today

Flash Manufacturing PMI (2:45 pm GMT)

Flash Services PMI (2:45 pm GMT)

Revised UoM Consumer Sentiment (3:00 pm GMT)

What can we expect from Gold today?

Gold prices are consolidating around $4,070 per ounce following a week dominated by sharply reduced Federal Reserve rate cut expectations. The probability of a December rate cut has collapsed from 50% to approximately 30-36% after hawkish FOMC minutes and a stronger-than-expected September jobs report showing 119,000 jobs added despite rising unemployment to 4.4%. The stronger dollar resulting from reduced easing expectations has created headwinds for gold in the near term.

Next 24 Hours Bias   
Medium Bullish

The Euro (EUR)

Key news events today

French Flash Manufacturing PMI (8:15 am GMT)

French Flash Services PMI (8:15 am GMT)

German Flash Manufacturing PMI (8:30 am GMT)

German Flash Services PMI (8:30 am GMT)

ECB President Lagarde Speaks (8:30 am GMT)

What can we expect from EUR today?

Friday, November 21, 2025, brought challenging news for the euro as EUR/USD traded near 1.1528, marking a weekly decline of 0.8%. The most significant development was deeply disappointing flash PMI data from Germany and France, with both countries showing contraction across manufacturing and services sectors. Germany’s services PMI fell sharply to 49.4 (missing forecasts of 51.8), while France’s composite PMI dropped to 44.8. This weakness was compounded by a stronger US dollar, as markets reduced Fed rate cut expectations to just 27-34% for December.

Central Bank Notes:

• The Governing Council of the ECB kept the three key interest rates unchanged at its 30 October 2025 meeting. The main refinancing rate remains at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. This decision reflects policymakers’ assessment that the current monetary stance remains consistent with medium-term price stability, while incoming data confirm a gradual return of inflation towards the target.
• Recent indicators point to stable price dynamics. Headline inflation remains near the 2% mark, with energy prices contained and food inflation easing slightly after earlier supply bottlenecks. Wage growth continues to moderate, contributing to the slowdown in domestic cost pressures. The ECB reiterated its commitment to a data-driven, meeting-by-meeting approach and emphasized flexibility amid uncertain global financial conditions.
• Eurosystem staff projections have not been materially altered since September. Headline inflation averages remain at 2.0% for 2025, 1.8% for 2026, and 2.0% for 2027. Recent softening in producer prices and subdued pipeline pressures suggest limited upside risks to inflation, though geopolitical tensions and potential commodity shocks continue to pose uncertainties to the outlook.
• Euro area GDP growth remains on track with earlier forecasts, projected at 1.1% for 2025, 1.1% for 2026, and 1.4% for 2027. Forward-looking indicators, including PMIs and industrial sentiment surveys, signal some stabilization in activity following weakness in the third quarter. Public investment and recovering export activity are expected to offset softer private sector demand in the near term.
• The labor market remains resilient, with unemployment rates at multi-decade lows and participation rates strong. Real income growth continues to support household spending, even as consumption growth normalizes from earlier highs. Financing conditions remain favorable, aided by stable banking sector liquidity and improved credit demand among small and medium-sized firms.
• Business sentiment remains mixed, reflecting lingering uncertainty over global trade policy and the path of US tariffs. However, easing supply chain costs and improved export competitiveness due to softer exchange rates are providing some relief to manufacturing and external-oriented sectors.
• The Governing Council reaffirmed that future decisions will depend on an integrated assessment of incoming data—covering inflation trends, financial conditions, and the state of policy transmission. The Council emphasized that no pre-set path for rates exists; keeping all options open should the economic outlook shift markedly.
• Balance sheet reduction continues smoothly, with holdings under the APP and PEPP declining as reinvestments have ceased. The ECB confirmed that the pace of portfolio runoff remains in line with its previously communicated normalization plan, supporting a gradual withdrawal of monetary accommodation in a predictable manner.
• The next meeting is on 17 to 18 December 2025

Next 24 Hours Bias
Medium Bearish

The Swiss Franc (CHF)

Key news events today

SNB Chairman Schlegel Speaks (12:40 pm GMT)

What can we expect from CHF today?

The Swiss franc remains well-supported, trading near multi-year highs against major currencies. Key developments include the positive US-Switzerland trade agreement, reducing tariffs to 15%, widening trade surplus to CHF 4.3 billion in October, and today’s scheduled speech by SNB Chairman Schlegel. Despite Switzerland’s Q3 GDP contraction of 0.5%, the franc continues to benefit from sustained safe-haven demand amid global uncertainties, expectations that the SNB will maintain its 0% policy rate in December, and improving trade prospects following the tariff deal.

Central Bank Notes:

• The SNB maintained its key policy rate at 0% during its meeting on 25 September 2025, pausing a sequence of six consecutive rate cuts as inflation stabilized and the Swiss franc remained firm.
• Recent data showed a modest rebound in inflation, with Swiss consumer prices rising 0.2% year-on-year in August after staying above zero for three consecutive months; this helped alleviate fears of deflation that were mounting earlier in the year.
• The conditional inflation forecast remains broadly unchanged from June: headline inflation is expected to average 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027. The risk of a negative rate move has diminished for now, but the SNB retains flexibility should inflationary pressures weaken again.
• The global economic outlook has deteriorated further, weighed down by heightened trade tensions—especially with the U.S.—and ongoing uncertainty in key Swiss export markets.
• Swiss GDP growth moderated in Q2 after a strong Q1 boosted by front-loaded U.S. exports. The SNB expects growth to slow and remain subdued, with forecasted GDP expansion between 1% and 1.5% in both 2025 and 2026.
• Labor market sentiment in the Swiss industrial sector has softened on concerns over export competitiveness and potential adjustments to production, but the overall growth outlook stays broadly unchanged
• The SNB reiterated its readiness to respond as needed if deflation risks re-emerge, emphasizing its commitment to medium-term price stability and a robust, transparent communication policy, with the introduction of more detailed monetary policy minutes beginning in October.
• The next meeting is on 11 December 2025.

Next 24 Hours Bias
Weak Bearish

The Pound (GBP)

Key news events today

Flash Manufacturing PMI (7:30 am GMT)

Flash Services PMI (7:30 am GMT)

What can we expect from GBP today?

The British pound remains under sustained pressure, trading near 1.3070 against the US dollar at seven-month lows. Four consecutive days of declines reflect a challenging confluence of factors: softer UK inflation data that has pushed December Bank of England rate-cut probability to 80-85%, hawkish Federal Reserve positioning that has dollar strength accelerating, and ongoing uncertainty ahead of Chancellor Rachel Reeves’s November 26 Autumn Budget. Today’s critical data releases UK retail sales and flash PMIs—will provide fresh insights into economic momentum, with manufacturing expected to remain in contraction while services hold up.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) met on 6 November 2025 and voted by a majority of 7–2 to keep the Bank Rate unchanged at 4.00 percent for a second consecutive meeting. The decision reflects the Committee’s cautious approach as inflation remains above target, but underlying economic momentum continues to weaken. Two members maintained their votes for a 25-basis-point cut, citing further signs of labor-market softening and weak business sentiment.
• The BOE adjusted its guidance on quantitative tightening (QT), maintaining the reduced pace established in September. The planned reduction of UK government bond holdings remains at £67.5 billion over the next 12 months, leaving the current gilt balance near £550 billion. Policymakers described the recalibrated QT path as “appropriate for current market conditions,” emphasizing the importance of liquidity management amid heightened volatility.
• Headline inflation moderated slightly to 3.6 percent in October from 3.8 percent previously, driven by easing food and transport prices. However, core inflation has shown only gradual progress, holding near 3.9 percent. The MPC noted that services inflation and administered energy costs continue to exert pressure, highlighting the challenge of achieving the 2 percent target sustainably. The Committee’s latest projections see inflation falling toward 3 percent by mid-2026, with further downside expected if energy and wage dynamics continue to normalize.
• Economic activity remains subdued. Estimates place Q3 GDP growth close to zero, with both business output and consumer spending restrained. The unemployment rate has edged up to 4.8 percent, while pay growth cooled to just under 5 percent year-on-year. MPC members acknowledged that pay settlements are weakening further, signaling an easing in labor cost pressures as demand softens. Surveys from the manufacturing and services sectors suggest muted hiring intentions through year-end.
• International factors continue to complicate the policy outlook. Fluctuating oil prices—partly linked to renewed Middle East tensions—alongside fragile global demand have contributed to higher market volatility. The MPC reiterated that external shocks, including global food and energy disruptions, could temporarily slow the disinflation path but remain unlikely to derail the medium-term moderation in prices.
• The Committee assessed risks around inflation as balanced. Downside risks arise from sluggish domestic growth and declining real income momentum, while upside risks remain tied to elevated inflation expectations and stubborn services inflation. Policymakers emphasized the need for patience, maintaining that any rate cuts ahead of clear inflation progress could undermine confidence in policy credibility.
• The MPC’s overall stance remains restrictive but increasingly balanced, with future moves expected to follow a cautious, data-driven trajectory. The Committee reaffirmed that monetary policy will stay tight until there is compelling evidence that inflation is returning to the 2 percent target on a durable basis.
• The next meeting is on 18 December 2025.
  
  Next 24 Hours Bias
  Weak Bearish

The Canadian Dollar (CAD)

Key news events today

Core Retail Sales m/m (1:30 pm GMT)

Retail Sales m/m (1:30 pm GMT)

What can we expect from CAD today?

The CAD is today cautious and defensive, with attention remaining focused on incoming economic data and commodity price trends for potential reversal signals. The Canadian dollar is currently under pressure from soft domestic data, weaker commodity markets, and global headwinds, including US monetary policy and trade uncertainties. Most analysts expect little relief for the loonie in the short term, with risks skewed to further weakness as Canada faces slower growth, higher unemployment in trade-facing sectors, and lackluster investment.

Central Bank Notes:

• The Council noted that U.S. tariff tensions have eased slightly following early progress in bilateral discussions, though the external trade environment remains fragile. Businesses continue to hold back on long-term investment, with the Bank highlighting that sustained clarity on U.S. trade policy is needed to restore confidence.
• The Bank acknowledged that uncertainty persists despite the softer U.S. tone, as incoming data show limited improvement in export orders. The manufacturing sector has stabilized but remains below pre-2024 output levels, reflecting weak global demand and cautious corporate spending.
• Canada’s economy showed tentative signs of recovery in early Q4, with GDP estimated to expand by 0.3% in October after two quarters of contraction. Mining and energy activity strengthened modestly, aided by steady crude demand, while goods exports posted a fractional gain.
• Service sector growth remained uneven, supported mainly by tourism-related and technology services. However, retail spending and household consumption were subdued, constrained by slower job creation and lingering consumer caution. The Bank judged overall momentum as fragile but improving marginally.
• Housing activity showed modest reacceleration in major urban markets as mortgage rates stabilized near record lows. Nonetheless, affordability pressures and stricter lending standards continue to cap overall resale volumes, leading to only a gradual recovery in the housing sector.
• Headline CPI inflation rose to 2.1% in October, reaching the Bank’s target for the first time in six months. Higher energy prices and a modest uptick in food and shelter costs drove the increase. Core inflation measures remained stable, suggesting underlying price pressures are contained.
• The Governing Council reiterated its data-dependent stance, indicating that the current policy rate remains appropriate amid tentative growth and balanced inflation risks. Officials noted that while additional stimulus is not ruled out, the emphasis has shifted toward monitoring the sustainability of the recovery rather than immediate rate adjustments.
• The next meeting is on 17 to 18 December 2025.

Next 24 Hours Bias
Medium Bearish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Oil prices continued their decline today, amid major geopolitical and supply-side developments, with Brent crude falling to about $62.71 and West Texas Intermediate (WTI) near $58.29 per barrel, marking the third straight session of losses. The market is highly volatile as investors closely watch the evolving Russia-Ukraine peace talks and the impact of new U.S. sanctions on Russian oil giants Rosneft and Lukoil, set to take effect today.

Next 24 Hours Bias
Weak Bullish