Explosive moves higher in global equity markets were seen this week as two large events hit markets simultaneously. First of all Joe Biden was named as US President-elect as he surpassed the required 270 electoral votes. Secondly, Pfizer and BioN-Tech announced their vaccine was over 90% effective in combating COVID-19 and that regulatory approval could be sought as soon as the end of November. These two pieces of news caused risk assets to sharply rally higher and bond yields too as better times for global growth are seen ahead for 2021.
Other key events from the past week
- Vaccine news: Pfizer and BioNTech’s breakthrough, November 09. The production of the vaccine will be scaled up into 2H of 2021 to reach 1.3bln doses for 2021. The ultra-low temperature freezers (-70C) needed to store the vaccine are commercially available to help with logistics.
- NZD: Interest rate decision, November 11. The RBNZ kept rates unchanged as expected. However, they were more upbeat on the economy and this caused investors to reduce their expectations of negative interest rates coming from the RBNZ. New Zealand bond yields rose sharply higher lifting the NZD this week.
- Gold: Record loss on vaccine news, November 09. Gold futures posted their biggest loss in 7 years as positive vaccine news boosted the USD and US bond yields. What does this mean for gold moving forward?
Key events for the coming week
- DXY: More dollar gains? November 16. The Dollar Index is stronger on the positive vaccine news. This does raise some questions now as to whether the reflation expectations have been priced in for now. Profit-taking on recent USD short positions may halt USD losses next week as 92.00 holds firm for the DXY.
- AUD: Employment data, November 19. In a light calendar week, the employment data out of Australia will be interesting. The RBA wants to see employment rising to support any consideration of a future increase in interest rates and low unemployment levels will support the AUD going forward.
- EUR: COVID-19: Europe shuts down, November 16-20. France, Germany, UK, Italy, and Spain have all announced new lockdown measures. Despite recent vaccine news rising COVID-19 cases will still weigh on European growth.