NEW YORK (BBH FX Strategy) --The much anticipated Bernanke speech in Jackson Hole is underwhelming. He did not break any new ground. Although much of the recent history is rehashed, the only forward-looking guidance is to reaffirm the recent FOMC statement and boilerplate language about being prepared to deploy its range of tools as appropriate. He did not go into much detail about those tools. In this sense, he was more revealing at his April press conference.

While the

Fed

has downgraded its economic assessment -- with formal forecasts due in November to reflect this -- it has not indicated a policy response, except to take the step of putting a time frame on "extended period." He has announced that the one-day FOMC meeting in September (20th) will be extended to a second day.

This will likely fuel speculation that the Fed may seek a consensus on its action, unlike this month's FOMC meeting. At the same time, Bernanke's speech devoted much time to urging Washington to put the U.S. on a sustainable fiscal path, when the economy was stronger.

It does seem in part that Bernanke may be indicating that monetary policy has largely done what it is able to in these circumstances and now the ball is in the government's court. Keep in mind that before the FOMC meets in September, Obama is expected to make an important economic speech that is anticipated to have additional measures to support the economy. The discussion has focused on three features: 1) extension payroll savings tax cut; 2) a public works/infrastructure bank -- even if not a new WPA; and 3) mortgage relief through

Fannie Mae

and

Freddie Mac.

The economic data in the coming weeks will also provide an important backdrop for the FOMC meeting. The August ISM reports, like recent survey data, is likely to be poor. The key report will be the jobs data. The headline may be depressed by the recent strike activity, but policy makers, even if not high frequency traders, will adjust for it.

If the FOMC does take new action next month, we suspect that the hawkish dissenters would find extending the maturities of its Treasury holdings may be among the least objectionable. Given the elevated price pressures, the bar to another round of asset purchases continues to seem high and would require an easing of this or a collapse of the U.S. economy. Self-fulfilling survey data and a convincing break of the 1100 area in the S&P 500 would aggravate the pressure on the Fed to act.

Lastly, note that the Jackson Hole event is just starting. Trichet's speech this weekend may also provide fodder come Monday, when incidentally, London markets are closed. The storm on the U.S. East Coast may also contribute to challenging Monday.

Marc Chandler has been covering the global capital markets in one fashion or another for nearly 20 years, working at economic consulting firms and global investment banks. Currently, he is the chief foreign exchange strategist at Brown Brothers Harriman. Recently, Chandler was the chief currency strategist for HSBC Bank USA. He is a prolific writer and speaker and appears regularly on CNBC. In addition to being quoted in the financial press, Chandler is often a guest writer for the Financial Times. He also teaches at New York University, where he is an associate professor in the School of Continuing and Professional Studies. While Chandler cannot provide investment advice or recommendations, he appreciates your feedback;

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