Central banks and currencies became prize winners in 2021
Who will get the main prizes for 2021?
Bread and Circuses. The luckiest ones in Forex get bread. Sometimes with butter. Circuses are available to both winners and losers. Great circuses! As at any entertainment event, gifts are handed out at the end of the year. In various categories.
The Turkish lira had no competitors in the nomination “Drama Queen”. Panic over the intervention of Recep Erdogan gripped not only the 83 million population of Turkey, but the entire Forex market. The 80% USDTRY rally due to an unexpected rate cut to supposedly fight inflation, followed by the most rapid drop of the pair’s price in history, led to a sell-off of funding currencies. Forex giants such as the euro and the yen have suffered. It all happened because of the president’s inability to play such an instrument as monetary policy:
– Son, you should practice the piano playing more!
– Maybe it’s enough? Three neighbors have already moved out!
The Fed and the ECB won the nomination “Venus-Jupiter”. The two central banks were so far apart in terms of monetary policy that they seemed to be on different planets. The Fed tried to taper QE and switch to raising rates quickly. The European Central Bank was beating about the bush, which predetermined the strength of the EURUSD downtrend. No one knows how long it will last.
– Yesterday I fell from a thirty-meter ladder!
– Did you survive?
– Yes, I fell from the first step.
The euro won in the “No Longer Needed” nomination. It had so many positive reviews at the beginning of the year! Hopes for a victory over the pandemic and the explosive growth of the global economy led to a soaring EURUSD to 1.235 in January and to 1.226 in May. The bulls’ strength ended there. The understanding that COVID-19 pandemic will continue, and the start of the Fed’s monetary policy normalization, upset euro buyers’ plans. The euro has lost its shine.
– Is that your ex?
– What is in the other bag?
Gold won the nomination “You Probably Don’t Remember Me”. For the first time in three years, the precious metal closed in the red zone. It lost to Bitcoin as a hedge against inflation. Investors have forgotten about gold. For how long? Banks scare with shocking bearish forecasts for XAUUSD, and bulls are now forced to remain silent, hanging their heads.
– Gold, where is your shell?
– Because you need to shut up like a clam!
The Japanese central bank won the “00:00” nomination. BoJ officials went against the global trend of monetary policy normalization and left Japan’s interest rates and yield targets at zero. Tokyo proved that in order to adopt a new policy, one must first abandon the old one.
– Mom, buy me a fish!
– What fish? Your hamster hasn’t died yet!
Finally, the Bank of England won the “Tete-a-tete Dialogues” nomination. BoE officials made decisions behind closed doors that not only surprised but shocked financial markets. First, by 7 votes against 2, the central bank kept the interest rate in November, then raised it by 8 against 1 in December. Andrew Bailey managed to mislead investors twice, and ruined his reputation. I do not like those who lie. In particular, myself.
Price chart of EURUSD in real time mode
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