Fed's Hawkish Tilt Unsettles Markets; Focus Turns to PCE, PMIs

In his inaugural FOMC meeting, Federal Reserve Chair Kevin Warsh emphasized the need to return inflation to the central bank's 2% target, delivering a hawkish surprise that disrupted the market's recent calm. The move came as geopolitical tensions, including an Iran deal, had been subsiding, lifting investor sentiment.

Market participants are now turning their attention to upcoming economic data, with the Personal Consumption Expenditures (PCE) price index and Purchasing Managers' Indexes (PMIs) expected to provide further clues on the Fed's policy path. The hawkish tone has introduced uncertainty into the near-term outlook for the dollar and risk assets.