We might not be so close to the end of the Fed rate hiking cycle.

The chance of a 100 bps hike at next Wednesday's FOMC was virtually wiped out after the services sector survey from S&P Global fell to 47.0 compared to 52.6 expected and 52.7 previously.

"Excluding pandemic lockdown months, output is falling at a rate not seen since 2009," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence in the release.

The market is now pricing in a Fed top in the 3.25-3.50% range in December from upwards of 4% a month ago. Rate cuts are increasingly being priced in for 2023.

The market is increasingly convinced that a slowing economy and improving supply chains will curb inflation and that demand and recession are growing risks. That's weighed heavily on the dollar today, particularly USD/JPY. It's down 165 pips today to 135.71.

Could this be the beginning of a big retracement in USD/JPY?

USDJPY daily chart