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AstraZeneca and the University of Oxford have released trial results early on Monday and say their COVID-19 vaccine has an average efficacy of 70.4%. One dosing regime regiments has shown a higher level of 90% according to the interim results. Deutsche Bank’s updated analysis suggests North America, the UK and Japan are likely to reach herd immunity by the early summer while the EU may also get there over the summer. This leaves the US dollar vulnerable on the verge of the new year.

Key quotes

“We are now on track for the majority of the developed world to immunize its vulnerable population to COVID-19 by the spring and the entire population by mid-year. Depending on the pace of vaccine distribution there may even be upside to this estimate with some countries achieving herd immunity before summer. By spring, things should be looking much closer to normal.”

“We are most confident the US and UK will likely be able to immunize the most vulnerable resident by the spring. By the middle of the year, the US and UK should reach full herd immunity. This timeline is also realistic for Canada and for Japan, both of which will have good access to Moderna as well as to Pfizer and AstraZeneca.”

“Europe can also achieve similar timelines to the US, but it will be dependent on Astrazeneca achieving a 90% efficacy rate with its dosing regimen or, alternatively, one more vaccine candidate such as J&J being successful. That the 90% efficacy rate is achieved with less than full doses is an important detail as it increases the amount of vaccines available. If neither of these conditions are met herd immunity in Europe is likely to be delayed by a few months to Q3. With the rate of viral transmission dropping over the summer months, this delay in full herd immunity is unlikely to be a material negative.”

“Emerging Markets, most notably Brazil, Mexico, India, Indonesia are also likely to be big beneficiaries of the AstraZeneca vaccine as well. We have earlier noted that the cheaper cost of production and distribution of Astrazeneca is especially relevant for lower and middle-income countries.”

“From a market perspective, the vaccine news cements our bullish view on most pro-cyclical currencies against the dollar through the turn of the year. We believe Scandinavian, dollar block and many EM FX currencies can all make new highs into year-end and we like being short the broad trade-weighted dollar.”