Watch today’s US Open for insights on the latest themes driving the markets, the Golden Cross of EUR/USD and more

- Friday’s NFP. - Job data shows deceleration in job growth, moderation in wages, participation rate ticked up. - Services PMI. - PMI shows contraction. US is a service-based economy. First time since June 2020 it contracted. - Factory Orders biggest decline since June 2020. - FOMC minutes were hawkish, no member sees rate cut this year. - December CPI is released on Thursday. Most likely moderated, but all eyes…

The latest Personal Consumer Expenditures (PCE) figures came out today and showed that inflation continued to moderate in November

Fed raised by 50bps. Less aggressive, but higher TR upped to 5.1 (4.6). Fed chair was hawkish. ECB even more hawkish than Fed. 50bps ongoing and QT announced. Hawkish ECB is a more convincing case — more ground to cover, but more difficult to deliver because of the fractious nature of the bank. BoE delivered 50 bps and was the least hawkish of the three. There was a three-way split:…

Inflation is moderating, yet the Fed remains aggressive in policy. We attribute a reason for this to the tight labour market.

Last week’s dot plots suggest rates will move higher, with the terminal rate adjusted upwards from 4.6% to 5.10%. The Fed chair’s tone during the media conference was hawkish. Risk markets were less than impressed. They sold off heavily for the rest of the week. The market thinks that Fed policy is too aggressive.

Both central banks slowed the pace of their tightening cycle this week, while delivering hawkish message and guidance, but the ECB appears to have been more aggressive

Today’s poor economic data will reinforce the market’s expectation of a Fed pivot. This despite yesterday’s hawkish Fed tone. Core retail sales printed at -0.2% MoM against and expectation of 0.2% and last month’s 1.2%.

Watch today’s US Open for commentary on the latest policy decisions by the Fed, the BoE and the ECB

The Bank of England slowed the pace of hikes with an 0.5% adjustment, in a three-way split decision and hinted at more tightening, but guidance is vague

The US Federal Reserve moderated the pace of rate increases, with a 50 bps move on Wednesday, but now expects rates to peak higher and Chair Powell delivered a hawkish message