A third consecutive Monday was dominated by positive vaccine news, this time from AstraZeneca. Equities and industrial commodities trade firm, but so does the US dollar, which benefited from a knee-jerk reaction to solid PMI readings.
On Tuesday morning, it seems that things returned to their normal ways. The EUR/USD pair trades close to 1.1850. The Australian and New Zealand dollars outperform, and the USD/JPY pair enjoyed the ride above 104.50 mark. The pound sterling holds to its gains, but remains in the wait-and-see mode as the EU – UK trade deal might be announced any minute now.
Less effective, but cheaper
AstraZeneca/University of Oxford were the latest to announce interim results. Their vaccine's average efficacy accounts for around 70%. This is considerably lower than Pfizer's and Moderna's candidates' results. The differences look discouraging, but only at first glance. It turns out that a 90% efficacy is achievable when a half dose is injected one month before a full dose. What is more, the AstraZeneca vaccine did not cause any known severe side effects. Secondly, it may be stored in a typical fridge. Thirdly, AstraZeneca has production capacity two times higher than Pfizer and Moderna combined. It could deliver around three billion doses in 2021. Last, but not least it costs only a couple of dollars and therefore is much cheaper than the alternatives.
The EUR/USD and gold plummet
The EUR/USD pair rejected 1.19 and turned sharply lower in a move which was at odds with proceedings on the equities and fixed income markets. The move was initially triggered by a strong PMI print contrasting with the collapse in the European services sector. Sinking gold prices, which plummeted below the important 1850 USD level as ETFs sold over 30 tons of yellow metal in the last couple of days, also played a role. The main factor standing behind the move was a correction of an extended bearish USD positioning before the Thanksgiving holidays. The main currency pair still trades sideways in a familiar range. Monday's plunge should not be perceived as a major reversal, break of the greenback's correlation with risk appetite or the beginning of US dollar broad appreciation. Despite the dive, the EUR/USD pair has managed to stay above 1.1820 and ticks higher early Tuesday.
Conotoxia research team