Citi discusses the impact of the vaccine news on the FX market and maintains a bearish USD bias into year-end.
"The announcement by Pfizer and partners reinforces our expectation of a global recovery and medical breakthroughs supporting risk assets into year-end and 2021 and that Markets will move on from the US election," Citi notes.
"In FX, we think these developments reinforce the case for AUD upside and our vaccine basket, which is long CAD, NOK and MXN vs JPY, CHF and USD. Given the scales of the market responses today, we think it may take a few days for markets to settle, including as position squeezes may be at work for now.
We therefore also do not read too much into the USD rebound today and remain bearish USD into year-end and into 2021," Citi adds.