The economic calendar is not particularly eventful today. The focus of market participants is on the Fed November meeting Minutes, which should reveal the balance of doves and hawks with regards to asset purchase program tapering, its pace and combination. This should help to clarify the odds of faster tightening in response to possibility of more inflation and the Central bank willingness to do that will likely support USD and keep Treasuries subdued.

The rapid growth in the yield differential between short-term EU and US bonds shows that the theme of rates is now central to pricing in the foreign exchange market:

Over the past three days, the yield difference between US and German bonds has grown by more than 10 bp. This cannot fail to attract foreign investors to Treasuries pushing USD higher and higher.

Accordingly, EURUSD has no desire to move into a correction yet, the key level where support may appear (1.1150-1.1170) has not yet been reached, and there are no turning points in the trend before Thanksgiving. The pair is testing the 1.12 level before the release of the Fed minutes:

GBPUSD is trading near the open despite a strong dollar on the back of the hawkish position of the Bank of England and supporting inflation data. The latest report showed that it accelerated to 4.2% in annual terms, so the regulator is likely to raise rates in December and the corresponding expectations create demand for the pound.

Short-term rates in the US continue to rise, thus supporting the demand for the dollar from foreign investors. The yield on two-year bonds exceeded 0.6% and reached 0.645% on Tuesday. Today, the yield on short-term securities is falling, nevertheless, there are no hints of a decline in the dollar yet due to the growing yield differential between US securities and bonds of other developed countries.

The minutes of the Fed meeting, unfortunately, will not correctly reflect the opinion of the FOMC members on inflation, since the inflation report for October, which showed a strong monthly rise in prices, appeared after the Fed meeting.