The past 24 hours have produced a flurry of Central Bank activity. We heard from the Fed yesterday, and that led into the trio of the Swiss National Bank, the European Central Bank and the Bank of England earlier this morning. Later today, we hear from two NAFTA participants when Bank of Canada Governor Stephen Poloz gives a speech in Toronto (the topic is, ‘Things Keeping the Governor Awake at Night’), followed by a Banxico rate decision (Mexico’s Central Bank) that carries a very high probability of a rate hike.

Despite all of these drivers, moves in the currency markets thus far have been relatively clean. U.S. Dollar weakness has come back, but this began to show even before the Federal Reserve’s rate hike yesterday. In yesterday’s article, we looked at DXY interacting with a huge zone of resistance. Prices had already started to move-lower after the CPI release earlier on the morning, and when the Federal Reserve released their statement at 2PM ET, the Dollar put in another leg of weakness.

U.S. Dollar via ‘DXY’ Four-Hour: Fold at Key Resistance After CPI, FOMC

The Fed

The net take-away from yesterday’s rate hike is that the Fed remains dovish. This can be derived from the fact that the Dollar sold-off by half-a-percent around yesterday’s rate hike and through the accompanying press conference. And this somewhat echoes the pattern of how markets have responded to the Fed throughout this year, seemingly discounting hawkish variables and instead focusing on whatever dovish factors could be gleamed.

But was the Fed really that dovish yesterday? And perhaps more importantly, is that perception going to stick around for much longer as we move into a 2018 that will see a quite a bit of change within the Federal Reserve board? My colleague Tyler Yell discussed this earlier this morning, noting that two of the more dovish Fed members (both of whom dissented at yesterday’s rate hike) will not be voting members next year, and this comes as Chair Yellen gives way to incoming Fed Chair, Jerome Powell. Also of relevance – my colleague Ilya Spivak points out that the Fed’s moves within their projections weren’t really dovish at all, as we saw upgrades to expectations for GDP, unemployment, inflation and core inflation.