The US dollar has fallen sharply after a speech from Fed Chairman Jerome Powell said it was time to pivot policy and he added a key line about keeping the jobs market strong.
“We will do everything we can to support a strong labor market as we make further progress toward price stability.”
That line echoes the famous ‘whatever it takes’ line from Mario Draghi, which was also delivered at Jackson Hole.
That line was a pledge to keep rates low and intervene in bond markets to keep the eurozone from fracturing.
This one is effectively a Fed put, highlighting that rates will be slashed if the labor market stumbles.
The market has taken the message to heart, at least initially. The US dollar sank across the board by 40-50 pips. The S&P 500 added to gains.
USDJPY 10 mins
Here is the take from WSJ Fedwatcher Nick Timiraos:
