Good morning
Welcome to the first report of 2022. I hope you all had wonderful Christmas and New Year celebrations and are returning to work fully recharged and refreshed. Today marks the 28th anniversary of my first day at GNI Ltd, not my first city job but certainly the one that saw me enter the world of FX and put me on a career path that has lasted until the present day. It’s enough to make me feel old.
So what has been going on? Well, Covid of course remains in the headlines with UK reporting in excess of 150,000 new cases each day. It is no surprise that I know more and more people who have had Covid recently despite being relatively cautious, including a couple of people who have now had it twice. On a more positive note, for now it would appear that initial hopes were right and that the latest variant seems less severe. Despite this the huge numbers of infections will put pressure both on hospitals, schools and the general workforce, with firms being told to expect large numbers of staff having to isolate. A shortage of testing kits is making home testing difficult particularly as close contacts are being asked to test daily.
Most kids will be going back to school this week and will be tested for Covid before they can attend. This could well be interesting given we are just a few days after New Years Eve where I’d have thought Covid would spread fairly easily. I wouldn’t be at all surprised if many kids are sent home but I am told that blended or online lessons are being prepared just in case.
Anyway, lets not focus solely on Covid. In other news, the James Webb telescope was launched into space on Christmas day and is now in the process of opening and tightening its vital sunshield which is roughly the size of a tennis court. There is some hope this will be completed today which I presume will be a major relief for the team that built it, but is followed by an extremely complex process of opening and piecing together the eighteen sections of the main mirror. A slow, nerve-wracking procedure. Even if all goes well it’ll be some months before we see any decent images unfortunately.
I was intrigued by news over the holidays that RHS Wisley released images of some objects it has uncovered during a clear out of its labs. While many objects are pretty normal, there are some artefacts that they have no idea what they were used for and have asked the public for help in identifying them.
Onto the markets. Well they have been reasonably stable, certainly no wild moves of note. Better risk sentiment has helped equities, US 10 year yields have ticked higher, now 1.63%. EURUSD is at 1.1300, a level it seems pretty comfortable at since mid Nov. It has traded mostly within 50 pips of this through December, give or take a couple of brief moves. GBP has been a solid performer, rising against both USD and EUR, GBPUSD now 1.3500 having been down below 1.3200 a couple of weeks back while EURGBP is at 0.8365 (GBPEUR 1.1955), having been almost 0.8600 (1.1630) last month.
So we start the year with a slightly more settled feeling. Of course we have the ongoing tensions on Ukraine/Russia border and I still see China tasking action on Taiwan at some point. There will certainly be more ups and downs through the coming year but we will all do our best to take it in our stride.
Onwards and upwards……
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