Central banks are a sideshow when on tariff watch.

The FOMC meeting has come and gone with hardly a ripple in US yields and the US dollar, which fits very well with the backdrop: we aren’t waiting for Fed decisions or guidance, rather, we are waiting for economic outcomes and incoming policy moves that will drive those outcomes, namely from the Trump administration. Trump is the first mover, or primus motor for now and will remain so until we have the firm outlines of his administration’s tariff schedule and the pace at which it will or won’t ratchet higher as well as the follow-on response from the rest of the world. Once we have the tariff schedule, we’ll know where the market is priced. Some commodities markets showing rising premiums for copper in New York versus prices in London do show that the pricing of tariffs is real and already crystallizing in specific markets. Whether that is the same case for currency and broader risk sentiment . Some possible nervousness here over the weekend, by the way, given that Trump mentioned February 1 in association with earlier comments on tariffs against Canada and Mexico and even the EU.

While Trump’s next moves will dominate market attention, I can’t help but believe we may continue to see some fallout in key market sectors from the DeepSeek news this week, the market’s brave attempt to brush this off notwithstanding. The first key companies to report this week like Microsoft and Meta sounded more than positive (Microsoft CEO: It’s “all good news” as Zuckerberg defended Meta’s spending on hardware infrastructure and Microsoft has capacity constraints on its cloud service and is offering DeepSeek to customers on its Azure service already. We’ll only know perhaps in the next quarter if the introduction to DeepSeek is eating into demand for high-end chip hardware and related cloud services. (This is not an equity column, but the issue is important for risk sentiment as US tech stocks including Nvidia so dominate global markets.)

Otherwise, looking ahead we have the December PCE inflation data tomorrow – a minor distraction unless it produces major surprises in either direction. More important US data next week with the usual ISMs followed by the jobs report on Friday, but again, only huge directional surprises can generate attention. More interesting, perhaps, as a subplot is the Bank of England next Thursday, where the Bank may end up waxing more dovish than the market is pricing on UK growth risks. Watching EURGBP for the broad read on sterling relative strength after the big move to 0.8450 retreated today close to the final real support zone of 0.8325-50.

ECB meeting today and the Eurozone’s plight
The ECB will cut 25 basis points today and express a lot of uncertainty about the outlook while probably guiding for another cut in March (though saying it never “pre-commits” followed by more uncertainty. This is the common refrain around the world in this new era of fiscal dominance and the US’ first-mover status as noted above. Some minor focus in the crosses (EURJPY for example) possible on incoming flash January inflation from Germany tomorrow and Eurozone on Monday.

Chart: EURUSD
EURUSD firmly rejected the attempt into the 1.0500+ area, setting up solid resistance with the three-candle evening star formation, but not yet fully posting a rejection of this rally wave unless it can work down through the 1.0350-1.0325 zone. Some tariff news will be needed for the pair to challenge the lows and set sights on parity in coming weeks, otherwise we may drift around in the range.