Saturday, March 25, 2023

FX Traders Shrugged Off Pfizer’s Update


The big story in the news today was Pfizer’s (NYSE:) vaccine update. The results now show its vaccine being 95% instead of 90% effective in preventing coronavirus. This exceeds the 94.5% effectiveness reported by Moderna (NASDAQ:) earlier this week. Unfortunately, currency and equity traders were not impressed.


The problem is that while investors believe pharmaceutical companies are near the finish line, they understand that widespread dissemination can’t happen until spring of 2021 at the earliest. Moderna, whose vaccine has a longer shelf life and can be stored at -20 degrees Celsius (temperatures closer to a regular freezer) versus Pfizer’s -70 degree Celsius (colder than Antarctica), detailed the challengers of mass producing the vaccine. With additional manufacturing lines, they can only produce about 500 million doses. Also, as we have been talking about for the past few weeks, with widespread distribution of the vaccine months away, the pandemic will worsen in the U.S. and abroad. Japan set its virus alert level to its highest after reporting record cases on Wednesday.


The extended lower against all of the major currencies, with the and dollars leading the rise. Weaker building permits and housing starts didn’t help. Tomorrow’s should be softer as well given the sharp decline in the . Stronger inflation data from New Zealand and Canada helped to lift those currencies. In New Zealand, producer prices rose more than expected, and in Canada, rose 0.4% against a forecast of 0.2%. This uptick was no surprise considering that reported higher prices. The rise in also helped to drive the higher. With that said, the gained strength despite slower wage growth and decline in . 


extended its gains on the back of stronger inflation data as well, which is consistent with the rise in shop prices and the Bank of England’s decision to leave its inflation forecasts unchanged. The , on the other hand, lagged behind as the prospect of European Central Bank easing and Q4 contraction hangs over the currency. 

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