Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
Big bond buyers are lead into government debt rethink by strong euro
In 2017, the euro's double-digit revenues are actually prompting some of the world's leading money managers to view EU government debt more favorably because the key financial institution is intending to withdraw its support from the bond market.
Since September 2016 euro zone government bond yields have ascended steadily, when speculation over a reduction in the ECB’s 2 trillion euro plus bond-purchase program started. Market participants worried that a sag in official bond purchases would bring yields up.
However, some traders are assured that another push into the market was caused by he currency's actual strength.
Further euro revenues EUR=EBS could potentially push back the ECB's initiative to remove post-crisis monetary stimulus and also make government bonds more attractive because of a combination of currency revenues as well as policy support.
Market participants tend to purchase longer-dated bonds if they actually expect interest rates to go down or stay intact for an extended period.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The Canadian central bank will make a monetary policy report and announce interest rates on Wednesday, January 20, at 17:00 MT time. Also, the BOC press conference will be held later.
USD’s rally takes a pause, while riskier assets are modestly rising.
We are now past the middle of January, and this means that the largest US companies will report their earnings for the fourth quarter and many of them will provide the results of the entire 2020.