Markets are becoming increasingly concerned that the Fed and other global central banks, with their unrestrained determination to curb inflation by aggressively increasing interest rates, will push the world economy into a recession. Many prominent experts have argued about the possibility of a deep recession in the US, which does not make investors happy. This is why stock markets have been declining recently. But on Tuesday, there was a slight increase in US stocks and mixed dynamics in European stocks, which extended this morning in the Asian markets
Most likely, until the release of the US GDP data and the PCE index, markets will consolidate in small ranges. There will not be any sell-off unless GDP does not show a lower-than-expected growth rate of 2.9%. If the PCE index falls in line with expectations, a burst of local optimism may be expected, which could result in a rally. Of course, if the data disappoints, the sell-off will intensify.
Markets are likely to resume the upward movement today as investors are expected to close a number of short positions. However, rising positive sentiment could bring back pressure and cause a local weakening in Treasury yields. A negative scenario would also be a prologue for a sell-off that may intensify at the beginning of the new year.
USD/CAD
The pair is consolidating above 1.3575. Improving market sentiment and renewed rally in crude oil prices may put pressure on the pair, pushing it down to 1.3500 after hitting 1.3575.
XAU/USD
The pair is trading below 1822.00. A decline in dollar, accompanied by the growing demand for gold, could drive the price to 1840.00.
