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Weekly Alpha

News Recap: The Pound continues to see good economic data releases and UK inflation is still running at high levels

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Last week saw the return of optimism in the markets. Inflation is still at elevated levels and the supply chain remains a concern, but the markets seem to believe that these issues will eventually be resolved.

The big question is still what actions will be taken by central banks, and what effect they will have on risk assets. The Pound continues to see good economic data releases and UK inflation is still running at high levels. The market is pricing a full 15bp hike in next month’s meeting and more in February 2022, and this has risks.

Commodity News

Commodity currencies performed very strongly as risk rallied once again. The NZD rallied 2%, the AUD and NOK gained 1.5% and the CAD rallied 1%. The week’s big loser was the JPY. There is speculation that the Yen move has been driven by big institutional flows.

Oil remains driven by the global supply chain problems, and there seems to be no stopping its rally. It’s been a truly impressive run from the Covid lows where at one point in the futures market it traded at negative levels, and bears are simply annihilated since then. Last week the WTI rose a further 3.7%.

Gold News

Precious metals had a mixed week, but it was a positive one overall. Gold underperformed and rose 0.6%, having reached an intraweek peak of nearly $1800. Silver was a lot punchier, rallying 2.8%.

Cryptocurrency News

Finally, cryptocurrencies is still the top performing asset class. Confidence has well and truly returned, and the crypto fans are once again very optimistic on the basis of the upcoming launch of the Futures ETF. Governments and regulators are certainly looking more closely at cryptos, as they become a veritable force as an asset class.

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