FXStreet reports that economists at TD Securities prefer a defensive posture in the coming weeks, adding that the USD has some room to tactically rally.

“No doubt that vaccines are a positive long-term, we think the market is overestimating the timing and scalability of its implementation. We attempted to capture this dynamic by evaluating how well long/short/stay-at-home equity ‘vaccine’ baskets have traded to the overall global MSCI index. On this basis, equity markets have overshot.”

“We think it might be a touch early for an equity rotation to take place towards growth/value, as these sectors are reliant on a pick-up in economic activity – a challenging proposition as outlined above. COVID-19 mitigation measures in both the US and Europe also exacerbate this issue.”

“As far as the USD is concerned, we think a modest 2% rally in the very short-term is reasonable. We are long USD/CAD in looking for a move towards the 1.33/35 zone before fading.”