The start of 2024 FX trading has been characterised by a modest reversal of some of the very benign, pro-risk trends that dominated late last year. At the heart of the story is the consensus view of a US soft landing, where inflation back on target can allow the Federal Reserve to bring rates back to some kind of normal level (e.g. to 3% from 5.25% today) without the economy needing to contract sharply. At its peak in late December, this story had the market pricing around 160bp of Fed easing in 2024, with the first cut priced as early as March. The start of the year has poured a little cold water on that kind of ... (full story)