A client note from Citi saying that the market is likely underpricng positive coronavirus vaccine prospects.

Trade is to buy a basket of:

  • Canadian dollar
  • Mexican peso
  • Norwegian krone

Funded by (ie sell):

  • yen
  • Swiss franc
  • USD

Citi note that this "vaccine optimism" trade is closely related to 'risk-on' trades. As for timing, the analysts are wary - it may be too early due to:

  • near-term investor focus on the US election
  • the risk of second waves

What to watch for timing is:

  • Preliminary Phase III results as soon as next month should provide better opportunity for entry