Bank of Canada's Delaying the Inevitable; Britain's on the Verge

Markets on Wednesday continued to follow the news around the omicron. It was very interesting to observe how the seemingly obvious negative they managed to transform into a reason for optimism. As shown by the results of the study, the Pfizer vaccine is 40 times (!) Less effective against Omicron than against Delta. It would seem that this is a failure, complete and categorical. But as it turned out, if 3 doses of Pfizer vaccine are hanging in the body, then it is protected as well as from Delta. And everyone seized on this fact, presenting it as a panacea.

Of course, no one asks how many are vaccinated with 3 doses relative to the total mass of people. And if they asked, it would become clear that for 90% + this news is practically a statement of the fact of their vulnerability to a pandemic. That is, we are somewhere in the first half of 2020, when lockdowns were the only means of struggle.

By the way, about lockdowns. Since the omicron is marching around the world with might and main, this is not an idle question. In the UK, for example, in light of the exponential growth in the number of cases with the omicron strain (an increase of 10 times per week), the issue of lockdown is already being seriously condemned. And the authorities can be understood, because many picked up the omicron not on a trip, but without leaving Britain, that is, it is already spreading inside the country. In this light, we'd not suggest you to buy a pound at all.

If you buy anything, the Canadian dollar is better, ideally against the euro, but it is also possible against the US dollar. Even despite yesterday's decision by the Bank of Canada to leave the parameters of monetary policy unchanged. On the one hand, the markets were somewhat disappointed, as they secretly hoped for an earlier rate hike than April 2022. On the other hand, this decision is quite logical in the light of the omicron. Note that the markets are expecting 5 rate hikes by the Bank of Canada in 2022, the first of which will be in March or April. That is, the Central Bank of Canada will be more aggressive with respect to the FRS, which again plays into the hands of the Canadian dollar.