FX.co ★ The focus of the Fed's protocol

Today, the focus of the market will be the publication of the January FRS protocol on monetary policy. Markets are waiting to confirm whether the Fed wants to continue to actively follow the process of raising interest rates or not.

In the wake of growing expectations that despite everything, the Fed will continue the cycle of raising interest rates this year, the yield of government bonds of the US Treasury has already reached local highs. Earlier last week, the yield on the benchmark of 10-year Treasuries was approaching the rubicon at 3.00%, reaching 2.944%. This trend in the debt market indicates that traders of this segment of the financial market are confident that the American regulator will not only raise rates in March by 0.25%, but will also likely do not two but three more, at a high probability. At the December meeting, it was decided to raise interest rates in 2018 three more times. However, investors in the debt market now believe that neither can be in the aggregate if it is raised four times.

That is why we are seeing a local strengthening of the US dollar. Moods in favor of the expectation of higher interest rates push it up. Another positive for the dollar is the depreciation of the euro, which came under pressure because of internal problems. The slowdown of some economic indicators and even their decline, which looms in the wake of a weakening inflation, may force the ECB to extend the buy-out of assets at least by the end of the year. Although until recently, the representatives of the European regulator repeatedly hinted that they would like to end the program in September.

In our opinion, the euro could continue its downward trend. If the ECB's Thursday minutes record shows an increase in concerns over a decline in inflation and a slowdown in economic indicators, while Friday's consumer inflation figures will likely show continued decline, the euro may continue its decline.

Forecast of the day:

The EURUSD pair is trading above 1.2320. Overcoming this level against the background of the positive sentiment for the US dollar with the content of the Fed's protocol could lead to a drop in price to 1.2335.

The USDCAD pair is above 1.2645. It can continue to grow to 1.2735 on the wave of positive news from the US as well as the resumption of a decline in oil quotations.