German bunds gain on renewed fears of hard Brexit; investors eye ECB’s first policy meeting of 2017

The German bunds gained Monday, following renewed fears of a hard Brexit and in the run up to the United Kingdom Prime Minister Theresa May’s speech, scheduled for Tuesday. Also, investors are curiously eyeing the European Central Bank’s (ECB) first monetary policy of 2017, scheduled to be held on January 19.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 2 basis points to 0.32 percent, the long-term 30-year bond yields also plunged 1-1/2 basis points to 1.07 percent and the yield on short-term 2-year bond barely slid 2-1/2 basis points to -0.74 percent by 09:15 GMT.

According to various news reports, PM May, in her keynote speech due on Tuesday, is expected to keep the UK no longer restricted to the rules of the European Court of Justice, post-Brexit, the report added. However, it may not be surprising that the PM wants to quit the common market.

The ECB is widely expected to end in the decision to maintain the status quo on monetary policy. Also, the tone of the accompanying press conference given by President Mario Draghi should similar to that of the previous month.

Lastly, the final December HICP data for both Germany and the Eurozone are due and should be confirmed at their respective preliminary readings. Eurozone external trade figures for Nov are likely to reveal healthy surpluses on both the merchandise trade and current account balances, and German Dec PPI data should reveal the extent to which pipeline cost pressures have been bearing up on overall inflation.

Meanwhile, the German stock index DAX Index traded 0.66 percent down at 11,552.50 by 09:25 GMT, while at 9:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bearish at -114.78 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex