The market has not changed its mind.  Following Brainard's comments yesterday the market had downgraded the chances, which were already modest, of a Fed hike next week.  The September Fed funds futures is unchanged on the day.  The implied yield of 41 bp matches the 50-day moving average. 

Our approach to Fed-watching is clear:  Among the cacophony of voices, the Troika of Fed leadership, Yellen, Fischer and Dudley provide the clearest signal. They are most often on message, and their comments have been the best indications of policy.  

Remember at the end of last summer; Dudley said a rate hike was less compelling.  This foretold the lack of hike last September.  Earlier this year, as several regional presidents were talking up a rate hike, Yellen pushed against it. 

The shaving of 2017 and 2018 growth forecasts, recognition of continued downside risks did not prompt the ECB to adjust monetary policy.  Rates were left unchanged, as widely expected.  The ECB also refrained from extending the asset purchases.  This is somewhat disappointing.  It was the only action that investors were discussing as a possibility.  Bond yields appear to be backing up in response. 

The last two weeks have been about the US.  First, it was Jackson Hole. The leadership of the Federal Reserve, Yellen, Dudley and Fischer sang from the same songbook. They all signaled that the time was approaching to take another step in the normalization of monetary policy, without specifying precisely when.

Then it was the US employment report, which Fischer had specifically identified as important.

The world changed after the financial crisis in 2008. What lessons can we draw on the role of central banks since then?

There are at least four lessons we have learned.

The US dollar staged a strong pre-weekend rally on hints that the Fed will raise rates before the end of the year.  There was initially follow through dollar buying in Asia before a more stable tone emerged in Europe, where London markets are closed for a bank holiday.  The easing of the dollar’s upside momentum may set the stage for a bout of profit-taking later today and tomorrow.  

Yellen's presentation at Jackson Hole today is the highlight of the week.  It also marks the end of the summer for many North American and European investors.  It may be a bit of a rolling start for US participants, until after Labor Day. However, with US employment data next Friday, many will return in spirit if not in body. 

Former Minneapolis Fed President Kocherlakota, and now a professor at the University of Rochester used this Great Graphic in a recent Bloomberg column.

Kocherlakota was a dove when he was at the Fed and remains dovish.  He is concerned that the US economic performance is, as he says, not what it seems.  By this, he means it is weaker than the GDP figures suggest.  He acknowledges the US has grown faster than the other high-income economies.  He dismisses it because the US population has also grown faster, but the participation rate has not.

The US dollar has fallen against all the major currencies this month. Even the pound has gained about 0.3% against the heavy greenback. 

What is most striking about the dollar's decline is that is has taken place despite a modest upgrade of the odds of a Fed hike.  Consider on the broadest level, the Dow Jones polls that found 71% expect a rate hike before the end of the year compared with about 50% in the July survey. 

Last week, some market participants were giving more credence to what seemed like dovish FOMC minutes than to NY Fed President Dudley's remarks that accused investors of complacency over the outlook for rates.  Yesterday, Vice-Chairman of the Federal Reserve Fischer seemed to echo Dudley's sentiment, and this has underpinned the dollar and is the major spur of today's price action.

It is not a good day for the US dollar.  It is being sold across the board.  The seemingly dovish FOMC minutes released late yesterday appears to have gotten the ball rolling.  The takeaway for many was that any officials wanted more time to assess the data at the July meeting. 

On September 18 2016, Glenn Stevens will end his ten-year mandate as governor of the Reserve Bank of Australia (RBA). His experience in the top job provides a wealth of lessons for the next generation of policymakers; that’s arguably his most important legacy.

A graduate from the University of Sydney and the University of Western Ontario in Canada, Stevens worked in the RBA research department between 1980 and 1992. He then held positions as department head, assistant governor (economic) and deputy governor. In 2006, he was appointed governor.

Former Fed Chair Bernanke keeps a blog at Brookings.  His latest post offers insight into how to think about Federal Reserve, and in particular, Fed officials' understanding of the US economy. 

Sterling has slumped two cents in the wake of the Bank of England's announcement.  It cut the base rate 25 bp and announced a resumption of its asset purchase program.  It will buy GBP60 bln of Gilts and added corporate bonds to its purchase plan, which will be completed over the next six months.  Corporate bonds will initially account for up to GBP10 bln asset purchase.

The Bank of England owns today, though tomorrow will be about the US jobs report. The BOE disappointed the market last month by not immediately responding to the UK referendum.  It had laid out a somber economic and financial scenario as a risk case if the UK chose to leave the EU. At the time, and even after the referendum, some accused Carney of being too partisan.