German bunds gain ahead of 5-year auction, ECB policy decision  

The German government bunds gained Tuesday ahead of the 5-year auctions scheduled to be held on March 8. Also, investors remain keen to watch the European Central Bank’s (ECB) monetary policy decision scheduled to be held on March 9.

The yield on the benchmark 10-year bond, which moves inversely to its price, slumped 1 basis point to 0.33 percent, the long-term 15-year bond yields fell nearly 1 basis point to 0.56 percent and the yield on short-term 2-year bond plunged nearly 2 basis points to -0.84 percent by 08:00 GMT.

The ECB is expected to maintain its dovish stance at the meeting this week although inflation has reached the 2 percent target. The ECB has said it will not change its monetary policy based on such a rise in inflation and in the introductory statement from the latest ECB meeting it was communicated that 'the Governing Council will continue to look through changes in HICP inflation if judged to be transient and to have no implication for the medium-term outlook for price stability'.

The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures moved lower by 0.25 percent to USD55.87 and West Texas Intermediate (WTI) fell 0.19 percent to USD53.10 by 08:00 GMT.

Lastly, investors will be closely eyeing the trade balance, due on March 10 for detailed direction in the debt market.

Meanwhile, the German stock index DAX Index traded 0.02 percent lower at 11,958 by 08:10 GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bullish at 143.81 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex