Economies

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

The German index comes from its worst week since September, as the European Central Bank delivered a hawkish message, expecting more rate hikes ahead and steep economic slowdown

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.

USOil started the week with a three-day relief rally on demand optimism, but slides since yesterday after the Fed pointed to more rate hikes ahead

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

The market is anticipating that the current hiking cycle is reaching its peak, with the risk-on sentiment more prevalent since the beginning of October. This is not surprising given the forward-looking nature of the markets.

In this week's podcast, FXCM senior market specialists, Russ and Nik, discuss the aggressive hike by the RBNZ despite other banks signalling a slowdown in pace. In addition, the two also talk about oil demand out of China and give their opinion on the Fed's minutes. In addition, this Thursday will see the preferred measure of inflation - core PCE - released, and Friday is NFP Friday. Listen to these…

The United Kingdom was in the spotlight this week, with a series of economic data and the government’s budget, but the pair had limited reaction

The pair had one of its best days of the year on Wednesday as a result of the soft inflation figures from the US and extends its gains today, past key tech levels