The euro’s post-Fed losses have pulled back from a new low at 1.1134 but the Fed / ECB divergence is in full effect. Fed Chair Powell’s hawkish message has made it clear to any doubters that this time is different, and he is prepared to act. Inflation is running hotter, the labour market is tighter, and the US economy is stronger than at the start of the previous tightening cycle. The time for the pace of policy adjustments to now speed up has come and markets are already pricing in close to five rate hikes (118bps) by December, from 100bps before the Fed meeting last night. This should mean the dollar gains more ... (full story)