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The Aussie dollar and other currency ‘risks’ that show a strong positive correlation with global stock market performance outperformed early in the new week, amid a combination of investor relief upon learning that Pfizer’s vaccine candidate was successful and the US electoral cycle is coming to an end.
Pfizer and partners BioNtech said the vaccine was 90% effective in fighting COVID-19 and could complete the safety data assessment during the third week of November and are currently on track to seek regulatory approval from November.
“The risk-sensitive Australian dollar soared on Monday on promising news from the COVID-19 vaccine,” said Randolph Donney, a Reuters market analyst. “The effusive market response to vaccine news has prolonged the rally in stocks and other riskier assets after last week’s US election results.”
Pfizer-BioNtech said it is optimistic that the immunizing effect of its vaccine will last for at least a year, although that is not yet certain.
In a Monday briefing, Pfizer-BioNtech said they should be able to produce 1.3 billion doses, which would be enough to vaccinate 650 million people by the end of 2021; only 50 million doses should be available in 2020.
“I’m not going to comment too much on the trials because I’m not a vaccine expert, all I can say is that’s good news. Although we are not there yet, the news that this vaccine could be very effective is the best that the markets can hope for. Public health officials will remind us that there is a long way to go and many challenges will be met along the way, but there is a huge sense of optimism today – light at the end of the tunnel. . Let’s just hope the vaccine deniers don’t get in the way, but 2021 has gotten a lot brighter, ”says Neil Wilson, chief market analyst at Markets.com.
The Australian dollar competed with the Swedish krona and the Canadian dollar for the second best performing title in the G10 basket of the world’s largest freely traded currencies, with the Norwegian krone being the best performing.
Amid the outperformance of the Australian dollar, the Australian pound-dollar exchange rate fell 0.42% to trade at 1.8013, while the Australian dollar-US dollar rose 0.40% for s ‘trade at 0.7315.
Today is a great day for science and humanity, as the first set of results from our Phase 3 COVID-19 vaccine trial provides compelling evidence of our vaccine’s ability to help prevent COVID-19 . https://t.co/UjcoSD75tT
– AlbertBourla (@AlbertBourla) November 9, 2020
“The Pfizer vaccine would prevent 90% of Covid infections in a large study. This is much more than the 60-70% expected based on the results of previous vaccines. Investors see for the first time the light at the end of the Covid tunnel ”, says Mathias Van der Jeugt, analyst with KBC Markets.
Risky assets such as the Australian dollar started the week in the spotlight after absorbing the weekend news that Joe Biden had won the US presidential election. The forex market had an ambiguous position on the winning candidate; the most important outcome for the market is that the electoral cycle and the inherent anguish it engenders are nearing completion.
“With the election results almost over, the market looks set to look forward to a strong year for the economy and earnings,” said Michael J Wilson, Euquity strategist at Morgan stanley. “When bull markets start simultaneously with a new business cycle, they typically last for years, not months or quarters. As such, we believe that this bull market has a long way to go both in terms of time. and price. “
Modeling from Natwest Markets Meanwhile, the Australian dollar is on their long-term buying list.
Natwest Markets’ long-term interregional framework model suggests a call to buy for the Australian dollar as well as the Canadian dollar, Swedish krona and euro in the G10 space, “in line with our expectations of rise for EURUSD and AUDUSD, ”said Paul Robson, Head of FX Strategy G10 at Natwest Markets.
The model aims to predict the performance of the currency six months into the future and on average it correctly predicts 63% of the times for the G10.
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