The German bunds climbed Thursday after the country’s GfK consumer climate index for the month of May disappointed market expectations, while investors remain keen to watch the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled today by 11:45GMT.
The German 10-year bond yields, which move inversely to its price, jumped 1-1/2 basis points to 0.64 percent, the yield on 30-year note remained flat at 1.29 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.53 percent by 09:00GMT.
With employment continuing to grow, German consumers remained upbeat about their personal finances, and therefore, their willingness to buy inched higher to very close to the top of the recent range. However, economic optimism took a turn for the worse, with the relevant index falling to a seven-month low. But the reasons for the weakening appear to be factors outside the country rather than domestic economic challenges – the survey cited the escalation of tensions in Syria and protectionist US trade policies.
The main event today, of course, will be the conclusion of the latest monetary policy meeting at the ECB. After last month saw the Governing Council drop its easing bias on the net asset purchase programme in terms of quantity, no substantive change to policy is expected this time around.
Indeed, some policymakers had signaled that the Governing Council will have a deeper discussion on the future of the monetary policy in June, when the ECB publishes its next set of macroeconomic projections, while last week news stories suggested that the Governing Council is content with waiting until July before announcing the end of QE.
Meanwhile, the German DAX traded 0.02 percent higher at 12,424.26 by 09:05GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 23.23 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex
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