For all the anticipation and waiting, we didn't get much of anything new from Powell honestly - at least in my view. There were two parts to his message yesterday and the first was a repeat of last week's communique in his press conference, in which markets saw as being a softer stance.
The second was when he mentioned that "we are going to react to the data" and "if there is strong labour market and higher inflation data, we may have to do more on rates". Adding that it means that the Fed might even tighten policy by even more than what is planned, depending on the data of course.
That said, he did offer up a caveat saying that he does expect the labour market to soften moving forward. So, we shall see. As mentioned last week, this is very much a market that will go where the data takes it now. As such, that makes the US CPI data next week a big one to watch.
Powell's remarks yesterday did reverberate strongly across markets with stocks and the dollar being sent for a ride. There was initial optimism as Powell didn't sound any hawkish alarms but that changed after he said that the Fed might do more depending on the data. However, that was all counteracted by dip buying after with the S&P 500 then finishing up by 1.3% on the day.
As for the dollar, it did a couple of round trips against major currencies before settling lower mostly with the yen and aussie being the big winners on the day. USD/JPY fell by a little over 1% to 131.00 while AUD/USD also gained by 1% after a volatile trip from 0.6920 to 0.6980 and then to 0.6900 before settling at 0.6960 levels now.
Oh, that Powell feeling.
