November 30, 2022

Hopes for recovery on early rollout coronavirus vaccines

LQDFXperts Weekly Highlights: Hopes for economic recovery on early rollout coronavirus vaccines

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Investors place their hopes for economic recovery on early rollout coronavirus vaccines, even as the world faces surging cases and delays to fresh U.S. stimulus.

An early rollout of coronavirus vaccines helped to raise hopes that lockdowns that have halted the global economy could be nearing an end.

Hopes that the first COVID-19 vaccine could be available within weeks renewed bets of a swift economic recovery next year.

A top official of the U.S. government’s vaccine development effort said Sunday that the first vaccines could be given by mid-December. Also, Britain could give regulatory approval to Pfizer-BioNTech’s COVID-19 vaccine this week.

On the other hand, millions of Americans are expected to ignore warnings to stay home for the Thanksgiving holiday.

The Federal Reserve might have to ease monetary policy further, particularly with no fiscal stimulus deal in sight. Last week’s surprise move by the U.S. Treasury Department to end some emergency lending programs only added to the speculation.

The Trump administration is looking at moves that would restrict Chinese companies from buying a range of U.S. goods and technology. However, investors eyed longer-term prospects of improving Sino-US ties under a Biden presidency. Democratic President-elect Joe Biden’s winning of the presidential.

The EU and British officials’ words reassured investors that Brexit negotiations are still ongoing. Chief Brexit negotiators suspended direct talks on Thursday when a member of the EU team tested positive for COVID-19.

PMI data showed a sharp contraction in eurozone business activity as a result of lockdown restrictions. European Union leaders will continue to discuss the bloc’s 1.8 trillion-euro ($2.14 trillion) COVID-19 recovery plan. The bloc’s economy is on track for its first double-dip recession in nearly a decade.

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Vaccine optimism still a key player- Inflation and key releases eyed

The focus this week will be on PMIs, as well as GDP releases in the US, UK and EU.

  • Later today Europe PMIs will be released (Monday 23.11 – 7:15 in France, 7:30 in Germany, and 8:00 for the whole eurozone). On the same day, investors will be looking for the UK Manufacturing PMI and UK Services PMI.
  • The German Final GDP will provide details for the economy of the biggest economy of Eurozone on Tuesday (24.11). After a decline of -9,7% in Q2, analysts expect the German economy to rebound in Q3. Investors’ eyes will also be on the US GPD, for Q3. The forecast stands at 33.1%, unchanged from the initial estimate.
  • The minutes of the U.S. central bank’s last policy meeting are due to be released on Wednesday (25.05). The FOMC minutes will probably confirm Fed policymakers discussed adding to the bank’s asset-buying plans.
  • On Thursday (26.11), ECB Monetary Policy Meeting Accounts will be in focus. The ECB will release the minutes of its October policy meeting. Investors will be looking for clues whether the ECB is planning additional easing before the end of the year.

Follow this week’s economic calendar.

LQDFXperts – Hopes for economic recovery on early rollout coronavirus vaccines

Risk appetite in currency markets was boosted by progress towards a COVID-19 vaccine rollout. Investors continue to show a tolerance for risk, despite the resurgence of Covid-19.

EUR/USD showed limited movement throughout the week. The greenback ended the week on a loss against a currency basket. Promising news on vaccines has been weighing on the safe-haven dollar. The euro has repeatedly failed to break above $1.1893 resistance last week but posted small weekly gains. The common currency to clear the November top of $1.1919 to extend its uptrend.

GBP/USD posted gains for a third straight week, rising 0.70%. Sterling had its third consecutive week of gains against the dollar driven by renewed hopes of an EU-UK a trade deal. The pound has looked sharp, with gains of 2.6% in the month of November.

USD/JPY continues to show robust movement, as the pair fell 0.75% last week. Investors await Japan inflation data. Japan’s Statistics Bureau will release the October month inflation data on early Friday morning in Asia.

AUD/USD showed limited gains for a second successive week. The Australian dollar posted its best monthly gain versus the U.S. dollar since April.

USD/CAD showed limited movement last week. The Canadian dollar has posted strong gains in November. With investor sentiment towards the US dollar at low levels, the Canadian currency could make further inroads.

PLEASE NOTE The information above is not investment advice.

Sources: Reuters, CNBC, BBC, The Guardian