The hopes for the Covid-19 vaccine are increasing. The influence of this news can already be seen on the financial market, especially if we look at the situation that the US dollar is having as of now. As the recent movements in the market are showing, the price of the USD is down in a number of currency pairs.
Also, investors are more optimistic about the US stimulus deal, which is further affecting the price of the US dollar. Hopes for the deal and vaccine progress have pushed the USD to a near 2-1/2-year low level, which has made the currency cheaper in a number of pairs. Although Congress was not able to reach an agreement on a new US coronavirus relief package, recent signs are showing that a new $908 billion bipartisan proposal could be gaining traction in the country as the negotiations continue.
The talks about the stimulus, in addition to the coronavirus vaccine positive news, will have a positive impact on gold in the short term, while it is very likely to weaken the USD. However, experts are claiming that the impact of vaccines will be very much limited.
Official data of the International Monetary Fund, IMF, has found that the global economy in 2020, because of the coronavirus, would shrink as much as 4.4%. This is a huge number and is worse since the Great Depression in the 1930s. The United Nations suggested that the unemployment rate around the world skyrocketed during the Covid-19 pandemic, and in April 2020, developed economies had a 3% increase in unemployment.
Many experts have said that the recovery of the unemployment rate will be a prolonged affair. The Covid-19 pandemic has severely damaged the growth of economies around the world. Because of this, many experts are claiming that the vaccine will be one of the only ways that could help the world return to a relatively normal state.
What could change?
Never in human history have we had a vaccine arrive in the middle of the pandemic. Because of this, the benefits that it could bring can be extremely large. As of today, it can be said that many factors are influencing financial markets globally. In 2020, however, the one that had the biggest impact was the Coronavirus and political and economical uncertainty caused by it.
The Covid-19 vaccine will reduce the lockdowns in the country, it will also encourage international investiture, and boost economic growth worldwide. All of these things are predicted to have a huge impact on the market, which will stimulate bullish and bearish volatility in asset classes.
Optimism regarding a vaccine might be translated into stronger consumer confidence, and generate sectoral rotation. Which, in response, could be very helpful for trading markets. For example, because of coronavirus, the demand for the equity market sector has been hit very hard. The vaccine could re-energize this market, which is a very good thing.
The news of so many companies coming up with the Covid vaccine has sparked huge hopes that the global economy could finally bounce back strongly. However, while it is a fact that the vaccine could have a huge influence on the global economy, experts say that it won’t happen all at once.
The announcement of the new vaccine has already sparked a stock-market rally as investors anticipated the reopening of economies, however, even after the vaccine is finally approved around the world, it would take some time for economies to re-open.
Some of the best Forex brokers in the market have actually said that the market has changed a lot in the last few months. Many have reported that more people around the world have started trading Forex, which is a great thing for this market.
The influence of coronavirus was huge in financial markets around the world, especially stocks. Because of the situation in Spring, prices of the majority of companies in the market have started falling. This finally resulted in the Stock Market crash of 2020, when prices of even the leading companies dropped.
Some of those companies are still having a very hard time getting back to the pre-pandemic situation, which is very concerning for them. However, experts are saying that once the vaccine is available globally, these companies might have a better chance of coming back to the market. However, at this point, the recovery could take a lot of time.