Reflecting on a Week of Economic Events: Insights by Luca Santos

I delved into a whirlwind of economic events this past week, traders. It's been an absolute marathon with the Fed, ECB, Bank of England, and inflation rates dominating the scene. Today, let's take a moment to wrap up the opportunities that arose and set the stage for what lies ahead this Friday.

Let's rewind a bit. The ECB and the Bank of England (BoE) took center stage recently. Depending on your timezone, the BoE happened yesterday, while the ECB rolled out this morning—around midnight or thereabouts.

The BoE's hawkish stance at 5.25% certainly caught my attention. That mere 0.25% difference from the US's 5.5% got me shifting gears, moving from a short to a long stance on GBP USD. I'm eyeing that 130 level, even though it seems far-off—probably hitting it in the first half of 2024. Why? Well, I expect the Fed to trim rates and the BoE to maintain, driving GBP upwards, albeit with the usual market fluctuations.

On to the ECB—a different story with rates at 4%. That 1.5% difference from the Fed speaks volumes. Interestingly, the market seems more resilient toward the ECB than the Fed, already factoring in some cuts. It's a tale of divergent expectations between the market and the Fed, a topic we dissected in detail on a recent podcast with Peter.

My predictions on the Eurodollar over the last few quarters? I've been on point, forecasting the 1.12 mark for the fourth quarter, and here we are. Looking ahead, I'm foreseeing a Eurodollar above 1.12, even reaching 1.14 or 1.18. It might sound audacious, but trust me, it's rooted in macroeconomics, not wizardry.

Let's not forget the Swiss National Bank's rate halt and the spot-on call about the US retail sales surpassing expectations. It's not about magic; it's about macroeconomics—the right blend of study, patience, and market direction understanding.

I'm thrilled about our upcoming webinar next Tuesday. Join in; let's keep the conversation going. Share these insights with your pals, because shared knowledge elevates everyone. Wishing you all a peaceful, rejuvenating weekend. See you bright and early next week!

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