A curious case of recent currency market moves following the pharmaceutical sector news in the past week
Yesterday, Osaka-based Takeda Pharmaceutical Co. announced that it is considering a bid for UK-originated Shire Plc that could be somewhere in the region of $50 billion. This of course comes after the news on Tuesday that GSK is to buy out Novartis (based in Switzerland) for $13 billion.
While all these things play a part in the shares of the company and its respective sector, how much exactly do they weigh in on FX movements?
Looking at the GSK-Novartis deal, we can see that GBP/CHF was actually lower in trading on Tuesday - and some quarters in the market say that has partly to do with the deal between the two companies.
Sterling was among the weaker performers in European trading that day, and that owed a part to a host of factors such as quarter-end flows, possible yen repatriation, Buba flows, among other things.
And looking at the announcement by Takeda yesterday. Is it a coincidence that the yen slipped further following the news?
Under UK takeover laws, Takeda has up until 25 April to make a formal offer - since Shire is listed in the UK - but these mega-deal flows take time to execute. They are usually done periodically once things are confirmed, though there will always be traders who are wanting to get ahead of the game.
So, in the midst of all the quarter-end havoc that we've been seeing for the last couple of days, maybe the most valid reason for the moves is actually the simplest reason - flows/supply and demand.
