Australia’s Business Conditions Strengthen in August as Inflation Pressures Subside

Economic

Summary:

Australian business conditions improved in August 2025, with stronger sales, profitability, and employment indicators, while cost growth slowed to its weakest pace in four years, signaling relief for margins and inflation....

Conditions Return to Long-Run Average

The National Australia Bank survey showed the business conditions index rose two points to +7 in August, matching its long-run average. While the business confidence index slipped four points to +4, it remained within historical norms, suggesting firms are cautiously optimistic despite global uncertainties.

The gains were driven by steady sales momentum, with the survey’s sales measure holding at +12, and profitability rising two points to +4. These improvements reflect a causal link between stronger household spending supported by lower borrowing costs and easing inflation and better corporate performance.

Sectoral Strength and Regional Recovery

Cyclically sensitive industries such as manufacturing and retail recorded notable gains, highlighting that consumer-driven demand is beginning to flow into business activity more broadly. NAB chief economist Sally Auld noted that regions and sectors facing headwinds in recent years have shown encouraging signs of recovery, pointing toward a healthier growth trajectory in the second half of 2025.

The correlation between consumer demand and business sector resilience is particularly evident here: as inflationary pressures recede, sectors most exposed to household spending are seeing conditions improve first.

Labour Market and Forward Orders Improve

Employment conditions rebounded by three points to +6 in August, fully reversing July’s decline. Forward orders also ticked into positive territory at +1, the first increase in two years. These indicators suggest firms are increasingly confident about sustaining output levels, which may support continued hiring.

The causal mechanism is straightforward: improved profitability and stable sales encourage businesses to expand workforce capacity, bolstering labour market stability.

Cost Pressures Ease to Multi-Year Lows

One of the most promising signs came from the cost side. Purchase costs rose at just 1.1% on a quarterly basis, the slowest increase since 2021. Retail price growth halved to 0.5%, while labour costs eased to 1.5% from 1.9%.

This easing of input costs both relieves corporate margin pressure and supports broader disinflation. The decline in cost growth demonstrates a direct causal relationship: as input prices slow, firms face less need to pass higher costs to consumers, reinforcing the cooling trend in inflation.

Stable Growth Outlook Into Late 2025

Australia’s August survey results point to an economy gaining momentum. Business conditions have rebounded to their long-run average, consumption remains firm, and cost pressures are softening. Together, these factors suggest that the economy is better positioned heading into the second half of 2025, with growth underpinned by healthier demand and stabilizing inflation.

For policymakers, the survey offers reassurance that rate cuts are transmitting effectively into the real economy. For businesses, the easing of cost pressures provides space to rebuild margins while cautiously expanding capacity in anticipation of sustained recovery.

Source: Reuters

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Economic

Commodity

Record-Breaking Rally Fueled by Fed Outlook

Bullion gained 0.3% on Tuesday to reach a fresh record, extending a 2.5% rally in the previous two sessions. The catalyst was the unexpectedly soft U.S. payrolls report, which has led traders to price in three Fed rate cuts this year, beginning with a 25-basis-point reduction next week. Because gold yields no interest, lower borrowing costs reduce the opportunity cost of holding bullion, creating a direct cause-and-effect boost to demand.

This year, gold has already surged nearly 40%, a move amplified by speculation on easing monetary policy and the perception that central banks, especially in Asia, continue to accumulate reserves as a hedge against financial instability.

Political Pressure and Haven Flows Add Support

Gold’s strength is also tied to rising political risks. President Donald Trump’s aggressive tariff regime has heightened fears of global economic fragmentation, while his repeated attacks on Federal Reserve independence have unsettled investors. This dynamic fosters a correlation between political stress and increased bullion demand: investors shift away from Treasuries into gold when policy credibility comes into question.

Geopolitical tensions, including conflict spillovers in Ukraine and Asia, have also bolstered safe-haven flows. Central bank purchases and retail accumulation reflect this dual role of gold as both a hedge against inflation and a geopolitical insurance asset.

Market Positioning and ETF Inflows

Exchange-traded funds (ETFs) added significantly to their holdings on Monday, marking the largest daily inflow in nearly three months. The trend reflects institutional investors reallocating into bullion following Fed Chair Jerome Powell’s Jackson Hole comments signaling readiness to cut rates. However, ETF holdings remain below the peaks seen during the Covid-19 pandemic and the early stages of the Russia-Ukraine war, suggesting scope for further inflows.

Goldman Sachs has projected that if even a modest share of Treasury holdings is redirected to bullion, prices could approach $5,000 an ounce a forecast that underscores how sensitive gold’s trajectory is to shifts in global portfolio allocations.

Data-Dependent Path Ahead

Whether gold’s rally continues will hinge on upcoming U.S. data. Revisions to job figures, as well as consumer and producer inflation reports later this week, could reinforce or temper expectations for aggressive Fed easing. Treasury auctions are another focal point, as weak demand for U.S. government debt could accelerate reallocations into precious metals.

Gold’s new record reflects a confluence of factors: Fed rate-cut expectations, political interference concerns, and persistent safe-haven demand. The rally is not solely speculative it rests on both policy-driven catalysts and structural demand from central banks and institutional investors. With monetary easing likely on the horizon and geopolitical risks unresolved, bullion’s upward momentum remains firmly in place, positioning it as one of the strongest-performing assets of 2025.

Source: Bloomberg

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What happened in the U.S session?

The U.S. session was dominated by reactions to weak jobs data and surging expectations of aggressive Federal Reserve easing, prompting equities (especially tech), Treasuries, and gold to sharply higher, while the dollar and yields slumped. The market is now intensely focused on the coming inflation data and the likelihood of a major rate cut at the September FOMC meeting.

What does it mean for the Asia sessions?

On 9 September 2025, Asian markets will be shaped by US monetary policy signals, Japanese political and growth developments, and key economic trends from China and India, while regional events like the Asia Summit and major forums will offer further insights on investment and policy. Traders should expect volatility in FX, gold, and Asian indices, and closely track these unfolding catalysts.

The Dollar Index (DXY)

The US Dollar faces a challenging environment on September 9, 2025, with the DXY trading defensively around 97.60 ahead of crucial NFP revision data. The combination of weak labor market conditions, growing Fed rate cut expectations, and political tensions regarding central bank independence continues to weigh on the greenback. While technical support levels around 97.40-97.70 remain in focus, a break below could accelerate dollar weakness toward the mid-96 range. The upcoming FOMC meeting on September 16-17 will be pivotal in determining the dollar’s near-term trajectory.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

Medium Bearish

Gold (XAU)

Gold’s breakthrough above $3,600 per ounce represents more than a simple price milestone; it reflects a fundamental repricing of global monetary and geopolitical risks. The convergence of dovish Federal Reserve policy expectations, sustained central bank buying led by China, currency debasement concerns, and persistent geopolitical tensions has created an exceptionally supportive environment for the precious metal.Next 24 Hours Bias

Strong Bullish

The Australian Dollar (AUD)

Tuesday’s Australian Dollar outlook appears constructive, supported by today’s expected strong consumer confidence data, robust domestic economic fundamentals, and continued US Dollar weakness. The currency has established momentum above key technical levels, with the 0.6600 barrier coming into focus as the next significant target. However, traders should monitor China’s economic performance and commodity price movements, which remain critical drivers for the AUD’s medium-term trajectory.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.

● Labour 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

Weak Bullish

The Kiwi Dollar (NZD)

The New Zealand dollar is experiencing a modest recovery in early September 2025, supported by improved Chinese manufacturing data, domestic economic resilience, and expectations of US Federal Reserve rate cuts. While the RBNZ continues its easing cycle due to domestic economic challenges, the currency has found near-term support from external factors. Key levels to watch include resistance at 0.5940 and support around 0.5835, with the currency’s direction heavily dependent on Chinese economic data and US monetary policy developments in the coming weeks.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 significant headwinds from Prime Minister Ishiba’s resignation, which has introduced substantial political uncertainty despite stronger-than-expected economic growth data. Market participants are closely watching the LDP leadership race, as the choice of successor could significantly influence Japan’s fiscal and monetary policy direction. The combination of political instability, rising bond yields, and delayed BoJ tightening expectations continues to pressure the yen, with USD/JPY trading near 148 levels as markets await clarity on Japan’s political and policy future.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.

● There are multiple risks to the outlook, with especially elevated uncertainty regarding the future path of global trade policies and overseas price trends. The BOJ will continue to closely monitor their impact on financial and foreign exchange markets, as well as on Japan’s economy and inflation.

● The next meeting is scheduled for 17 to 18 September 2025.

Next 24 Hours BiasMedium Bearish

Oil

Oil markets face a complex landscape in September 2025, balancing short-term geopolitical support against medium-term oversupply concerns. OPEC+’s measured production increase signals confidence in market fundamentals, but the group’s strategy of prioritizing market share over price support continues to cap upward momentum.With U.S. production at record highs, Libya recovering, and Venezuelan exports rising, supply growth is outpacing demand expansion despite ongoing geopolitical tensions. The coming months will test whether inventory builds and economic headwinds ultimately push prices toward the EIA’s bearish $58 forecast, or whether geopolitical risks and production disruptions provide sufficient support to maintain current levels around $62-66 per barrel.Next 24 Hours Bias

Medium Bearish

Source: IC Markets

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Economic

Business Conditions Rebound to Long-Run Average

The National Australia Bank (NAB) survey showed the business conditions index rose two points to +7 in August, returning to its long-term average. This reflects firmer momentum in sales and profitability, with the sales sub-index holding steady at +12 and profitability climbing two points to +4. Business confidence, though down four points to +4, remains aligned with long-run trends, suggesting sentiment is stable despite external uncertainties.

The improvement points to a cause-and-effect chain between macroeconomic policy easing and business performance. Lower borrowing costs and a slowdown in inflation seen earlier in official June quarter GDP data have clearly supported consumption, which in turn has lifted corporate revenues.

Sectoral Strength in Manufacturing and Retail

Cyclically sensitive sectors such as manufacturing and retail saw notable gains in both confidence and conditions. This aligns with the broader pattern of improved domestic demand: households, having faced headwinds in recent years, are beginning to re-engage in spending as inflationary pressures cool.

The correlation between stronger household demand and sectoral improvement suggests that stimulus from consumer recovery is filtering through more broadly, rather than being confined to isolated industries.

Labour Market Indicators Point to Stability

Employment conditions rebounded three points to +6 in August, offsetting the dip recorded in July. Forward orders also edged up one point to +1, the first time they have entered positive territory in two years, signaling potential stability in hiring and production plans.

This rebound suggests a causal relationship between stronger domestic demand and firms’ willingness to expand their workforce. As profitability improves and cost pressures ease, businesses appear more confident in maintaining or increasing headcount.

Cost Pressures Ease to Multi-Year Lows

A critical highlight from the survey is the sharp slowdown in input costs. Purchase costs grew at a quarterly rate of just 1.1%, the lowest since 2021. Retail price growth halved to 0.5%, while labour cost growth moderated to 1.5% from 1.9%.

These trends represent a causal link to inflation relief: lower cost growth directly reduces pricing pressures across the economy, offering both businesses and households more breathing room. It also creates conditions for sustained profitability, as margin compression eases.

Positive Trajectory Into Second Half of 2025

Australia’s August business survey reinforces signs of a durable economic rebound. Firms are benefiting from improved demand, profitability, and hiring, while easing cost pressures support both margins and inflation control. The combination of stronger domestic momentum and subdued input growth suggests the economy is entering the second half of 2025 with healthier underpinnings.

For policymakers, the data provides reassurance that rate cuts are transmitting effectively, bolstering activity without reigniting inflation. For businesses, the challenge ahead lies in sustaining confidence and investment as external risks such as global trade uncertainty continue to loom.

Source: Reuters

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Forex

Dollar Under Pressure from Jobs Concerns

In Asian trading Tuesday, the dollar index fell to 97.344, its weakest level since July 24. The drop came ahead of preliminary revisions to U.S. employment data for April 2024 through March 2025. Economists anticipate a downward adjustment of as many as 800,000 jobs, a figure that would highlight a much weaker labor market than previously reported.

The causal relationship is direct: weaker labor data strengthens expectations for Fed easing, which reduces dollar yields and undermines the currency’s attractiveness. As Alex Hill of Electus Financial put it, “The employment numbers are getting worse and worse at a heavy rate,” adding that the decline in the dollar could accelerate further.

Political Friction and Investor Anxiety

The Trump administration’s intervention in labor data has further unsettled investors. Reports suggest advisors are preparing a paper criticizing the Bureau of Labor Statistics, shortly after President Trump fired its commissioner, accusing her of manipulating data. This political intrusion raises correlation-based risks: while not directly changing the jobs numbers, the perception of compromised data integrity undermines market trust and amplifies concerns over central bank independence.

Bond investors have warned that long-term fiscal risks and political pressure on the Fed are being underpriced, suggesting greater volatility ahead.

Market Expectations for Fed Action

Traders now assign an 89.4% probability to a 25 basis point rate cut at the September meeting, with a 10.6% chance of a larger 50bp reduction, according to CME’s FedWatch tool. The combination of weak jobs data and political pressure makes deeper easing a credible scenario.

The effect on safe-haven assets is clear: gold edged up 0.1% to $3,636.58 per ounce, close to record highs, reflecting investor demand for protection against currency and policy instability.

Global Currency Moves Reflect Shifting Sentiment

The euro rose 0.1% to $1.1774, near a six-week peak, though gains were capped by France’s deepening political crisis after parliament toppled the government over debt-control plans. The yen firmed 0.2% to 147.22 per dollar following Prime Minister Shigeru Ishiba’s resignation, reversing earlier weakness.

Other majors also gained modestly against the dollar: the Australian dollar traded at $0.6598 and the New Zealand dollar at $0.5943, both up 0.1%. Sterling rose 0.1% to $1.3556, while the offshore yuan held steady at 7.1212 per dollar. These moves underscore a correlation: broader dollar weakness is spilling into FX markets, though domestic political and economic factors are moderating gains in some regions.

The dollar’s retreat reflects mounting pressure from labor market weakness and political noise that amplify the case for aggressive Fed easing. While the ECB is expected to hold rates steady this week and political crises weigh on the euro zone, the overriding driver remains U.S. monetary policy. Unless jobs data surprises on the upside, the dollar is likely to remain under pressure as investors prepare for a deeper policy shift from the Fed.

Source: Reuters

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Stocks

Historic Rally Driven by Trade Clarity

The Nikkei jumped 0.9% in early Tuesday trading to reach 44,018.78, a record high for the index, while the broader Topix rose 0.4%. The immediate catalyst was confirmation that U.S. tariffs on Japanese autos will be lowered by September 16, removing uncertainty surrounding a trade deal struck in July. For Japan’s auto-dependent economy, tariff relief has a direct cause-and-effect relationship with corporate profitability and investor sentiment, explaining the surge in equities.

Investor enthusiasm was also amplified by political developments. Prime Minister Shigeru Ishiba, known for his fiscal conservatism, announced his resignation. Sanae Takaichi, who advocates stronger government spending and monetary easing, is expected to run for leadership of the ruling Liberal Democratic Party. Markets responded by pricing in higher odds of pro-growth policies, correlating political change with expectations of renewed fiscal stimulus.

The dual drivers trade clarity and a potential shift toward expansionary policy together created a powerful rally environment.

Market Breadth and Sector Moves

Of the 225 stocks in the Nikkei, 144 advanced while 77 declined, showing broad-based strength. The top performer was Advantest, surging 6.7%, followed by Tokuyama, which gained 5%. On the downside, Citizen Watch fell 5.8% after confirmation it will be removed from the index in October, while Takeda Pharmaceutical dropped 2.4%.

This dispersion highlights both structural reshuffling within the index and investor rotation toward beneficiaries of global trade relief and domestic stimulus.

Milestone Signals Confidence but Risks Remain

Crossing the 44,000 threshold underscores investor confidence in Japan’s resilience amid global trade shifts and domestic political change. The rally rests on both tangible drivers tariff reductions that directly improve competitiveness and speculative expectations of policy easing.

Yet risks remain: global trade frictions, monetary policy uncertainty, and leadership transitions could all shift momentum quickly. For now, however, the Nikkei’s historic climb signals that investors are willing to look past political uncertainty and bet on growth-oriented outcomes.

Source: Reuters

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Commodity

OPEC+ Surprises with Modest Output Hike

Brent crude climbed 0.33% to $66.24 per barrel, while U.S. West Texas Intermediate gained 0.39% to $62.50. The move followed OPEC+’s weekend decision to raise production by just 137,000 barrels per day (bpd) starting in October. This increment is far smaller than the 555,000 bpd hikes seen in August and September, and even below the 411,000 bpd pace in July and June.

The direct cause-and-effect here is clear: smaller-than-expected supply additions reduce the risk of oversupply, immediately lending support to prices. The decision also marks a shift from the bloc’s earlier plan to maintain cuts until 2026, reflecting caution about fragile demand trends.

Geopolitical Risks Add to Supply Concerns

Oil prices also drew support from geopolitical tensions. Russia’s latest large-scale airstrike on Ukraine escalated the risk of new sanctions. President Donald Trump indicated readiness for a “second phase” of restrictions, while EU sanctions officials met in Washington to discuss the first coordinated transatlantic measures since Trump’s return to office.

If enacted, sanctions would curb Russia’s ability to export crude, directly tightening global supply. The causal linkage between geopolitical escalation and supply risk has been consistent throughout the war, and markets are now repricing the likelihood of renewed disruptions.

Macro Factors and Fed Outlook

Beyond supply-side dynamics, macroeconomic expectations are also influencing oil. The CME FedWatch tool shows an 89.4% probability of a quarter-point rate cut at next week’s Federal Reserve meeting. Lower borrowing costs generally support consumption and industrial activity, which in turn boosts oil demand.

Here the relationship is partly correlational: while rate cuts do not directly lift oil demand immediately, they improve the economic outlook and investor sentiment, reinforcing bullish momentum in energy markets.

Prices Supported by Dual Forces

Oil’s modest gains reflect a convergence of supply-side restraint and geopolitical risk. The smaller OPEC+ production hike provides near-term support by tightening expected balances, while potential sanctions on Russia raise the specter of further disruptions. Combined with easing U.S. monetary policy, the current backdrop favors price stability above $60 per barrel.

Yet the durability of this rally depends on how sanctions evolve and whether OPEC+ maintains discipline in the face of uncertain global demand growth.

Source: Reuters

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Australia’s Business Conditions Strengthen in August as Inflation Pressures Subside

Conditions Return to Long-Run Average

Sectoral Strength and Regional Recovery

Labour Market and Forward Orders Improve

Cost Pressures Ease to Multi-Year Lows

Stable Growth Outlook Into Late 2025

Source: Reuters

Gold Surges to Record High on Fed Cut Bets and Safe-Haven Demand

Record-Breaking Rally Fueled by Fed Outlook

Political Pressure and Haven Flows Add Support

Market Positioning and ETF Inflows

Data-Dependent Path Ahead

Source: Bloomberg

IC Markets Asia Fundamental Forecast | 09 September 2025

What happened in the U.S session?

What does it mean for the Asia sessions?

The Dollar Index (DXY)

Gold (XAU)

The Australian Dollar (AUD)

The Kiwi Dollar (NZD)

The Japanese Yen (JPY)

Oil

Source: IC Markets

Australia’s Business Conditions Strengthen in August as Cost Pressures Recede

Business Conditions Rebound to Long-Run Average

Sectoral Strength in Manufacturing and Retail

Labour Market Indicators Point to Stability

Cost Pressures Ease to Multi-Year Lows

Positive Trajectory Into Second Half of 2025

Source: Reuters

Dollar Hits Seven-Week Low as Weak Jobs Outlook Boosts Fed Cut Bets

Dollar Under Pressure from Jobs Concerns

Political Friction and Investor Anxiety

Market Expectations for Fed Action

Global Currency Moves Reflect Shifting Sentiment

Source: Reuters

Nikkei Surges Beyond 44,000 for First Time on Trade Relief and Stimulus Hopes

Historic Rally Driven by Trade Clarity

Milestone Signals Confidence but Risks Remain

Source: Reuters

Oil Prices Edge Higher on Smaller OPEC+ Output Hike and Russia Sanction Risks

OPEC+ Surprises with Modest Output Hike

Geopolitical Risks Add to Supply Concerns

Macro Factors and Fed Outlook

Prices Supported by Dual Forces

Source: Reuters

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