Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
Low rates weigh greatly on smaller German financial institutions
Extremely low official interest rates keep putting pressure on Germany's smaller financial instructions, as a couple of watchdogs reported on Wednesday.
The Bundesbank and BaFin, Germany's bank regulators, polled about 1,500 small as well as medium-sized banks, which account for up to 88% of institutions and also 41% of total assets.
As the findings revealed, financial institutions actually expect pretax revenue to go down by an overall 9% for the next five years.
It corresponds to a 16% sag in the banks' overall return on capital. Well, while abrupt, it’s still is less than the 25% sag in return on capital actually anticipated in last poll conducted two years ago.
Some financial experts state that the phase of stagnation provoked by low interest rates appears to be far from over.
Additionally, the regulators appreciated the fact that German banks were looking for alternative sources of income just to withstand low rates.
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.