With the vaccine rollout fast approaching and the economy on it’s recovery process, there are certain opportunities that are only available within this time-frame so hop on it quick! The UBS Global Wealth Management chief economist says that “Markets are following pandemic news at the moment – vaccine optimism seems to be supporting risk assets for the time being,” The vaccine is an important factor to consider in predicting the value of currencies as many traders see that it is a prerequisite to rebooting an economy.
Below are 3 potential trading opportunities to look out for.
- US Dollar is Trading Bearish
With Biden’s Stimulus Package being issued and hope that the global economy is beginning to recover, the USD’s value continues to weaken. The market has been focused more on riskier currencies as they appear to be recovering faster from the effects of the pandemic. The USD is currently trading at 91.85 on the DXY at the time of writing.
With the weakening of the USD, our preference is selling USD against stronger major currencies.
- Australian Dollar is Trading Bullish
The successful pace of the vaccine rollout in Australia has caused the AUD’s value to increase. As Australia has largely kept the virus under control, Fitch, an Australian credit ratings agency maintained a AAA credit rating as they predict that by this year, there will be a huge economic recovery in Australia.
With the strengthening of the AUD, our preference is for AUD buys against weaker currencies such as the JPY or the CHF.
- Euro is Trading Bearish
With new lockdowns being imposed, a slow rollout of vaccines, and the central bank providing a lack of economic stimulus, the European economy has faced contraction during the first quarter thus weakening the Euro. The Euro is starting to feel pressure from the GBP as for the first time since February hit GBP/EUR 1.17.
With the weakening of the EUR, our preference is to for EUR shorts, capitalising on the EU’s weak economy.