German bunds gain ahead of 5-year auction, August unemployment change

The German bunds gained during European session Tuesday as investors wait to watch the country’s 5-year auction and August employment report, scheduled to be released on August 29 and 30 respectively for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, fell nearly 1 basis point to 0.369 percent, the yield on 30-year note also slipped close to 1 basis point to 1.039 percent while the yield on short-term 2-year hovered around -0.595 percent by 10:00GMT.

This week the euro area dataflow brings several noteworthy releases for August, including the European Commission’s economic sentiment survey on Thursday and the euro area’s flash inflation estimates on Friday. In particular, the Commission’s headline economic climate index is expected to echo the message of the PMIs seen earlier this week, suggesting that business sentiment was little changed from July and therefore broadly consistent with economic expansion at a pace similar to that seen in the first half of the year, Daiwa Capital Markets reported.

Further, having risen to a more than five-year high of 2.1 percent in July, the headline rate of euro area inflation is expected to be unchanged in August, while core inflation is similarly expected to have moved sideways at 1.1 percent y/y. The equivalent CPI figures from Germany and Spain are due Thursday, while the French and Italian data are also due Friday. The end of the week will also see the release of the euro area’s unemployment figures for July, the report added.

Meanwhile, the German DAX traded 0.11 percent higher at 12,552.09 by 10:10GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bullish at 125.81 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex