The EURUSD pair jumped a full big figure on Powell’s remarkably dovish comments yesterday. The latest shift in voice could mark a clear shift in Fed policy and November minutes today could be key in whether markets take out more hikes for 2019 and/or price in more in the way of cuts further out. The market is now priced for a December hike and one hike next year. It could be discussed how the comment should be interpreted, but for risky assets it is important because it underlines that the Fed has increasingly become data dependent and is no longer on autopilot. If the weaker global economy or the trade dispute with China starts to impact the US economy, the Fed is ready to change course. Investors might even think that the Greenspan put is back

The EURUSD pair jumped a full big figure on Powell’s remarkably dovish comments yesterday. The latest shift in voice could mark a clear shift in Fed policy and November minutes today could be key in whether markets take out more hikes for 2019 and/or price in more in the way of cuts further out. The market is now priced for a December hike and one hike next year. It could be discussed how the comment should be interpreted, but for risky assets it is important because it underlines that the Fed has increasingly become data dependent and is no longer on autopilot. If the weaker global economy or the trade dispute with China starts to impact the US economy, the Fed is ready to change course. Investors might even think that the Greenspan put is back.

Ahead is the US, PCE core inflation numbers for October due to be released today. Based on the CPI index, we expect PCE numbers to come in at 0.2% m/m and -1.9 y/y, which is just below the Fed’s 2% target. FOMC meeting minutes are also due today and will be scrutinised in light of the Powell comments last night. In Germany, inflation numbers are due out today ahead of the eurozone-wide data tomorrow.