U.S. economy slips into recession?

U.S. economy slips into recession?


#SP500:


The central bank raised the range for its policy rate by 75 basis points to 1.50%-1.75% and published forecasts showing most policymakers support lifting borrowing costs further this year to perhaps 3.4%, and higher in 2023. The Fed is willing to risk in order to avoid what it sees as a far worse situation where inflation gets out of control and exerts far more damaging long-term harm. The Fed fought inflation at these levels, under former Fed Chair Paul Volcker in the 1980s. Volcker's aggressive tightening caused not one but two recessions. The Volcker disinflation was costly, but it was not credible initially. Powell earlier last week noted that one difficulty facing the Fed is that many of the factors driving inflation, and that will determine the strength of the labor market going forward, are beyond the central bank's control.


Trading recommendation: sell 3750 and take profit 3600.


U.S. economy slips into recession?


#WTI:


Oil prices tumbled about 5% on last week led by a slump in U.S. gasoline futures, as investors worried interest rate hikes from major central banks could slow the global economy and cut demand for energy. Also pressuring prices, the U.S. dollar this week rose to its highest since December 2002 against a basket of currencies. A stronger dollar makes oil more expensive for buyers using other currencies. This is a negative factor for oil prices. The global oil market continues to show signs of "turbulence", Russian Deputy Prime Minister Alexander Novak said, blaming uncertainties over oil production recovery in Libya, Iran and Venezuela and a lack of energy infrastructure. This is a positive factor for oil prices.


Trading recommendation: range 102.50 -109.00.


U.S. economy slips into recession?


XAUUSD:


The Fed approved its largest interest rate increase in more than a quarter of a century to stem a surge in inflation. The move raised the target federal funds rate by three-quarters of a percentage point to a range of between 1.5% and 1.75%. The spike in energy prices amid the Russia-Ukraine crisis has already sent inflation soaring across the world, which in turn has forced central banks into a more hawkish stance. My worst fears around the Fed have been confirmed: they fell way behind the curve and are now playing a dangerous game of catch up. High inflation is a positive factor for precious metals.


Trading recommendation: buy 1831 and take profit 1858.

 

David Johnson
Analyst of «FreshForex» company
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