With the end of 2021 just a few days away, it’s time to take a look some potential themes to watch for the new year, as well as our usual round of wacky predictions we’d like to see in 2022. But before checking out our quick thoughts on 2022, make sure to take a look at our extremely brief take on 2021.
More Inflation and Pandemic Woes in 2022?
Looking forward, inflation and pandemic issues will likely remain top trading themes for playas in any market to watch in the first half of 2022, with inflation and monetary policy speculation likely to be the main focus for FX traders. Odds are that prices in most sectors will stay elevated (but rise at much slower rates than 2021) and we’re just at the beginning of a monetary policy tightening cycle, which will likely be a bigger influence on relative currency performance than pandemic developments.
The Federal Reserve and the Bank of Canada are the next major central banks expected to start raising interest rates given the high inflation conditions and strong jobs recovery data in their respective countries, making the U.S. Dollar and the Canadian Dollar the candidates with the most potential for 2022 outperformance among the majors at the moment.
On the other end of the spectrum, the recovery in both Japan and Europe have been weak relative to the other major economies, in context to both pandemic and economic conditions. The euro in particular seems to have high odds of underperformance as an energy crisis in the European region and daily new infection records significantly raises the odds of economic distress and lowers the odds of the European Central Bank taking away monetary policy support any time soon.
If these scenarios play out with no major exogenous surprises, the odds are pretty good at the moment that we’ll see the strength in USD & CAD vs. weakness in EUR & JPY (as seen below) continue into early 2022.
Of course, the X factor in all of this is the COVID-19 pandemic and which way the world will progress in 2022. Right now, we’re seeing rising record case counts around the globe, but we’re also seeing vaccines and booster shots continue to be distributed. Also on the horizon to help are COVID-19 treatment pills, which can be taken by those who are at high risk of becoming a severe COVID-19 case.
Logically, this would suggest higher odds that 2022 will be the pandemic peak, but after seeing the rise of the Delta and Omicron variants in 2021, we can’t rule out the possibility of another variant coming along to shake the game up a bit. If a more dangerous coronavirus variant does come along, then this scenario would certainly not only influence economic expectations negatively, but also likely influence whether or not we’ll really see a tightening monetary policy regime in 2022.
Quick and Wacky Predictions:
Companies will start requiring workers to return to office but employees are hesitant to ditch their WFH lifestyle, giving rise to “WFM” or “work-from-meta” as a compromise. The good news is that nobody will notice anyone’s extra holiday weight (or is it lockdown weight) in the metaverse!
More 90s Themed Releases? 90s kids are large and now in charge of production decisions and you can bet that they’ll keep the ball rolling on bringing back their faves. Think they’ll stop at rebooting The Matrix or Sex and the City? Heck nah! Really hoping for a Starship Troopers remake that’s actually as good as the original!
More Asian pop culture hits? Western pop culture has embraced Asian content this year with hits like Squid Game and Shang-Chi, while BTS was all over the place with collabs with Coldplay, Ed Sheeran, Megan Thee Stallion, etc. We’re betting on Psy coming back to smash Spotify and Youtube records with a “Gangnam Style” remix featuring Justin Bieber, Olivia Rodrigo and of course, Snoop Dogg.
Crypto adoption continues to accelerate with over 1 billion people becoming regular active users in 2022. This space is so crazy and fast that any prediction actually wouldn’t be wacky, but we’ll take a shot and say that bitcoin and ether will lose the top spots in 2022. They’ll likely be replaced by whatever Elon Musk (the crypto whisperer) says the top crypto asset should be, but in reality, the best performing crypto asset for 2022 probably hasn’t even been released yet.
Back-to-back champs? Last year, we predicted that Tom Brady and the Buccaneers would win the Super Bowl over the Kansas City Chiefs…and it’s nice to finally get one right! We’re gonna see if a broken clock can really be right twice a day and go with that sports prediction once again because…well…why not!?
There ya have it, folks! These are some of our wacky, and completely ridiculous predictions for 2022, but we’re curious to find out what yours are.
