This is an important week for the market as we made three major central bank decisions within 20 hours. The data calendar also includes important top-level economic reports, which will also generate potential high volatility. This includes monthly non farm employment and ISM in the United States, eurozone inflation, and GDP. In addition, several large technology giants, such as Meta, Apple, Amazon, and Google's parent company Alphabet, reported fourth quarter performance.

It is worth noting that the central bank's interest rate decision has been digested by the market, with the Federal Reserve raising rates by 25 basis points on Wednesday and the European Central Bank and Bank of England raising rates by 50 basis points the next day. Therefore, the real uncertainty is not the actual interest rate hike, but the communication that accompanies them. The news from FOMC may be strongly influenced by some key data before the meeting. Conversely, with the end of this week's US employment and ISM service data, it may seem outdated.

The signs of declining inflation and economic weakness increase the likelihood of a small interest rate hike by the Federal Open Market Committee in the future. The peak of inflation seems to have passed now, but the labor market remains strong and tense. This may mean that wage pressure will intensify in the coming months, and policy makers will be highly vigilant about this. On the contrary, they may hope to delay the market's interest rate cut by the end of this year. The US dollar should find buying in this situation, and the stock market will reduce its recent healthy year-to-date gains.

The European Central Bank is expected to maintain a tough stance, with core inflation still very high and sticky. Due to expectations for interest rates after mid-2024 being almost as low as before the December meeting, it is believed that President Lagarde is discussing interest rates. Another 50 basis point interest rate hike at the next meeting in March may be finalized, which may lead to the euro reaching a new cyclical high.

The Bank of England is seen as carrying out a "dove style interest rate hike" in the face of economic turmoil. It has the same tense job market issues as the United States, but its high inflation is more like the eurozone. The latest forecast from MPC should show a mild economic recession but low inflation. As voting disagreements become more inclined towards doves, subsequent guidance may be quite moderate.