Markets plunged on Monday as unrest in China, which was due to frustration at lockdowns, led to sell-offs. Equity markets closed lower, while crude oil prices dropped significantly.

But the downturn is unlikely to last long because even though China's demand for commodities, goods and production capacity is important, a lot depends on the statements of world central banks. For example, St. Louis Fed President James Bullard said interest rates will continue to rise as inflation remains high. Lael Brainard, Thomas Barkin and John Williams said roughly the same thing, although they did not claim that aggressive rate hikes should continue. The upcoming speech of Jerome Powell is also expected to be hawkish, which can put pressure on stock markets and support dollar.

There are some that believe that stocks will rally because investors have long since played down the Fed's extreme monetary policy stance. Markets are also reacting with great fervor to positive news, such as the short-term increase after the US published its latest inflation data. If Powell's rhetoric also does not turn out to be hawkish, there is a good chance that risk appetite will surge ahead of the Fed's December meeting.

Forecasts for today:

USD/CAD

The pair is showing a local reversal on the back of a strong rebound in crude oil prices after its fall yesterday. A drop below 1.3415 will push quotes to 1.3320.

AUD/USD

The pair is rising amid improving market sentiment. A break above 0.6720 could bring the quotes to 0.6800.