Investors wasted little time getting their New Year mojo on and are flying right out of gates this morning amid optimism that widespread vaccine distribution will provide the ultimate economic kick-start offering a massive booster shot to corporate profits.

Perhaps a bit over-eager but showing few signs of a New Year hangover the “risk-on” party continues. So far investors opt to ignore the bureaucratic treacle in Washington that threatens to gum up the works, and surging Covid-19 case counts as more lockdowns have returned.

Simultaneously, the total lack of consensus around the Georgia Senate run-off poses a significant risk to the view.

Despite these problematic headwinds, investors think the vaccine narrative has such a long economic runway that stock prices cannot have fully reflected it all this far in advance. As people get vaccinated, they are likely to return to those activities most impacted by Covid-19 such as dining out, travelling and other personal service-related areas.

Oil rises

Following broader market sentiment out of the gates, oil prices have risen. Still, gains could be limited as politicians get handcuffed into tighter mobility restriction as countries worldwide look to re-impose lockdown. And with contagious mutations now ravaging the EU, several major oil-consuming countries are expected to extend current lockdowns.

Members of the OPEC group of oil producers and their partners will meet via videoconference on Monday to decide on production levels for February. Although prices have been stabilizing higher due to the vaccine optimism, the market has not turned the corner just yet on Covid-19 uncertainty to warrant anything other than OPEC drip-feeding barrels back to the needs monthly.

While it is increasingly clear that 2021 global demand will likely be above supply if OPEC+ can hold together, limiting downside risk in oil, near-term catalysts due to the new contagious mutations are more likely to be negative than positive for near term oil prices.

Forex markets

The US dollar is trading a bit weaker this morning nudged on by risk on proclivities which sees the EURUSD trading back to key resistance area at 1.2250. The market continues to build in boatloads of optimism for a global growth recovery in 2021 and an accompanying downward trajectory for the US dollar.

Asia currency traders will focus on the PMI deluges across the region, including China key Caixin gauges this morning.

Vaccine optimism is clearing the runway for the Malaysian ringgit to take flight in 2021 as the world returns to normal travel and consumption patterns, which will eventually support higher oil prices.

International market analysis and insights from Stephen Innes, Chief Global Market Strategist at Axi