During these 2 weeks, several hot topics are surrounding US debt ceiling deals. White House and congressional Republicans on Friday aim to put the final touches on a deal to raise the U.S. government's $31.4 trillion debt ceiling for two years while capping spending on many government programs, according to a U.S. official.
This sentiment has resulted in market doubt about the outcome of US debt ceiling deals and cash outflow from the equity market to get back cash on hand, which indirectly resulted in USD strong demand over the past week.
Another factor is due to the global financial system being tested by higher inflation and interest rate. Global Financial Stability Report shows that fragmentation risks to the bank and nonbank financial intermediaries have increased as interest rates have been rapidly raised to contain inflation. Historically, such forceful rate increases by central banks are often followed by stresses that expose fault lines in the financial system.
Trading Theme: GOLD
Gold serves as a safe-haven currency when the market heading to high-risk stage. By looking at the chart below, it is rejected for 3rd time and temporarily trending down mainly due to the US debt ceiling sentiment. There are possibilities that GOLD may break through level 2060; it all depends on the market volatility level and whether US will move into recession in the coming 6 months to 12 months.