Almost exactly one week after safe haven assets gold and JPY were slammed by news from Pfizer that its vaccine had an efficacy rate of above 90% and distribution could begin as early as December, further vaccine optimism has spurred fresh outflows.
This time it was Moderna’s turn to give markets a risk on pop; the vaccine maker announced that its had met the primary endpoint of its first Phase 3 study, with vaccine efficacy of 94.5%. Moreover, the vaccine is said to be storable at fridge temperature, rather than having to be kept frozen as is the case with the Pfizer vaccine.
That mean’s the Moderna vaccine addresses one of the key distributional concerns about the Pfizer vaccine; as noted, the latter’s vaccine needs to be kept frozen, and there were concerns that up to half of US hospitals lack the storage capacity, as well as the money required to invest in temporary storage, meaning distribution might face hiccups.
Moderna said that it would have 20mln doses ready to ship to the US by the end of 2020, and a further 500mln-1bln doses could be produced in 2021 for global usage.
Thus, today’s news further drives home the idea that an end to the global pandemic is in sight; we now have two vaccine makers (Pfizer/BioNtech and now Moderna) on standby to pump over 2bln doses in 2021, enough to at the very least vaccinate most of the world’s vulnerable.
With the world’s most vulnerable vaccinated, the death rate of the virus ought to drop off a cliff and so the urgency to keep virus numbers under control will thus also be reduced. That means less pressure for governments to enforce, and people to adhere to lockdown restrictions. That means a better performing global economy.
Returning to the market reaction; the move lower in gold and JPY was emphatic. The precious metal dropped more than $20 from above $1890 to below $1870, though most of this move has now been unwound.
Meanwhile, JPY was initially hammered against its major counter parts, though much of this move has also now mostly faded. USDJPY shot above 105.00 from previously below 104.50 (though has now fallen back to the 104.60s) and EURJPY shot back above 124.00, to briefly above 124.40, though has now fallen back to pre-announcement levels around 123.80.
Looking ahead; further vaccine announcements also seem likely to trigger volatility, with eyes on the AstraZeneca/Oxford University vaccine phase 3 study that ought to yield results by the end of the month.
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