The publication of the minutes of the Fed's July meeting completely confirmed the previous rhetoric – the regulator can begin the process of normalizing monetary policy this fall.

The presented minutes fully indicate that the Fed began to debate about the need to curtail the super-soft monetary rate even before the publication of the last strong July figures for US employment. At the same time, the members of the Central Bank motivated this by reaching some important levels of inflation, and, in our opinion, this is simply due to the growing fears of inflation stalling, if not to hyperinflation values, then to noticeably extreme levels, which could damage the national economy.

The markets reacted naturally to this news. The US dollar received support, while the US stock indexes fall. It also caused a decline in prices for commodity and commodity assets. Oil prices plummeted, although there was a decline in American crude oil inventories for the past week.

As mentioned above, the US dollar received noticeable support in the currency market. The ICE dollar index rose above 93.00 points and consolidated. All major currencies declined to this currency. The most affected were the New Zealand and Australian dollars, which are under pressure amid the slowdown in the growth of the Chinese economy, the fall in demand for commodity assets, and the strengthening of the US dollar.

The dynamics of the yield of the US Treasuries is interesting. The yield of the benchmark 10-year government bonds has fallen and was declining by more than 2.0% earlier. The yield of two-year Notes sensitive to changes in monetary policy collapsed by 4.29% although it should have surged in the conditions of expectation of tightening of the monetary policy rate.

How can this be explained?

We believe that the dynamics of the Treasuries are currently influenced by the growth of volatility in the markets. The picture of the Fed's future actions in the perspective of expected changes is not yet fully clear, as well as the growing tension in the Middle East due to the events around Afghanistan. That is why we are seeing mutually opposite phenomena – the strengthening of the US dollar amid a decrease in the yield of Treasuries. We believe that the desire of investors to avoid risk plays a significant role here, which is why the demand for government bonds of the United States and other economically developed countries is growing.

Assessing the current situation, we believe that the situation will continue to remain vague, which will maintain a high degree of volatility.

Forecast of the day:

The EUR/USD pair declined below the level of 1.1700 amid the absence of further inflation growth in the eurozone and expectations of the beginning of the process of normalization of monetary policy in the US. A consolidation below 1.1700 will allow the pair to further decline to 1.1

The AUD/USD pair is falling almost vertically. It will most likely further fall to the level of 0.7125 after dropping below 0.7225.