After reassessment of the pace of policy tightening by major central banks on Monday, which led to a sharp rise in short-term bond yields (German 2-year Bunds +5 bp, 2-year Treasuries +4 bp), trading on Tuesday was calmer, demand for risk assets increased. In the FX, the dollar is the outsider of the day, especially strong growth was shown by commodity currencies such as AUD and NZD, which rallied by an average of 0.9% against USD.

Apparently, it is becoming clear that not only the Fed, but also other central banks are thinking about raising rates or reducing asset purchases earlier, since the risks of inflation originating from supply bottlenecks and commodity markets rally which is getting more and more broader, no longer be ignored.

GBPUSD rose to a monthly high amid the fact that the Bank of England among the major central banks is now the most open in its plans to tighten policy. Over the weekend, the head of the Central Bank Bailey said that the Central Bank "will need to act" to balance the impact of rising energy prices, in particular the increased costs for firms and fuel inflation that they create. Markets are gradually strengthening in the opinion that the Bank of England will raise rates in November.

On the technical chart of GBPUSD, we can see that the price has broken the medium-term bearish trend, which may be an important signal for a bull market. Based on technical considerations, the closest target for the pair after a pullback will be the horizontal level at 1.3890:

Due to numerous supply bottlenecks associated with Brexit, inflation risks for Britain are among the highest among the leading economies, and apparently require policy adjustments by the BoE.

Investors in the stock market are slowly getting used to high oil prices, and the companies' earnings reports for the third quarter are positive enough to maintain optimistic expectations. Investors were actively selling USDCNH yesterday, i.e., Chinese risks are being discounted, which in the short term may boost rally of risk assets, as the yield premium associated with the possible negative consequences of Evergrande's default, is set to fall.

The wave of selling broke short-term support level for the dollar index at 93.69. If the price manages to gain a foothold below, then bearish dollar pressure is set to increase. However, if the dollar index manages to stay above the critical support level, the chances for recovery will likely be high: