WEEK AHEAD: DEC 27

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THE YEAR AHEAD | 2022

Video Script

Hi everyone, this is our last video for this year and there is no video next Monday so we’ve produced a special Year Ahead edition. I’ll look back at the trends of 2021 and then look at what could be the drivers for 2022, with a preview of some of the big political and international events that might spark some moves in financial markets. So stay right there.

 

Specifically in forex markets, the dollar was the big winner of 2021. With US inflation rising and the unemployment rate coming back down, traders correctly positioned themselves for Fed tapering. The Japanese yen was among the weakest as traders exited haven trades but the euro didn’t fare much better thanks to the relatively dovish ECB. The pound had a good year as part of the global re-opening trade, except vs the USD. The Aussie and New Zealand dollar are still well up from the lows of 2020 but spent much of the year unwinding some of those big 2020 gains.

 

Elsewhere it was another massive year for stock markets. At the time of filming the S&P 500 is up 27% this year, while France’s CAC 40 is up 25%. It was good but not so good in the UK and Germany, which saw the FTSE 100 rise 11% and the new DAX 40 index up 13%. The odd man out was Hong Kong and China with the Hang Seng finishing the year down 16%. The story of 2021 for stocks was the massive rebound in corporate earnings as economies reopened but the yearly comparisons won’t be as favourable in 2022.

 

It was a big year for oil thanks to inflation and supply bottleneck concerns but it was another ‘nothing’ year for gold and silver, which pretty much went sideways. Maybe 2022 will be the year for precious metals!

 

More generally, I think most will agree it was a really epic year for trading. Enthusiasm for trading that began during lockdowns in 2020 spread in 2021 thanks to things like meme stocks, another rally in cryptocurrencies and the ongoing bull market in equity indices.

 

Next up I’ll run through some of the big events scheduled for 2022 but before I do that- please remember to give this video a quick THUMBS UP for the youtube algorithm.  Thanks very much!

 

Right, so inevitably the biggest drivers of markets next year are likely to be things we don’t know about in advance but here are some of the important events to look out for anyway.

 

Taking place on November 8 we’ve got US Midterm elections. As a reminder, Democrats control all the levers of government in the US right now but their control of Congress is very thin and could flip back to Republicans.

 

If tapering goes according to schedule, the first Federal Reserve rate hike could come around July but other mitigating factors could see it get pushed back to later in Q3 or even Q4. Or if inflation really accelerates, it could even come sooner.

 

Now, if ECB President Christine Lagarde is to be believed, there will be no ECB rate hike in 2022. But central bank forecasts aren’t exactly known for their accuracy and with inflation at a 10-year high in the Eurozone, it might still happen.

 

Apple reaching a $3 trillion market cap almost happened in 2021 so it doesn’t seem too far-fetched to think it could happen in 2022. It would be the first company to reach the milestone if it does.

 

The FIFA football world cup is taking place in Qatar in November - it probably won’t have a big impact on markets, though if it gets cancelled because of covid - then covid might be affecting markets.

 

There are also elections in France, Australia and Sweden this year.

 

Right thanks everyone, happy holidays, good luck trading this week and make sure to click on subscribe so you don’t miss the next episode coming on January 10th.