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The German bunds remained flat during European session Thursday ahead of the European Central Bank’s (ECB) monetary policy meeting, due to be held today by 12:45GMT. Also, the eurozone’s gross domestic product (GDP) for the fourth quarter of 2018, released today, failed to provide any major market movements, remaining barely changed compared to the previous reading in Q3 last year.
The German 10-year bond yields, which move inversely to its price, hovered around 0.121 percent, the yield on 30-year note remained flat at 0.781 percent and the yield on short-term 2-year too remained barely changed at -0.518 percent by 11:20GMT.
Eurozone’s seasonally adjusted GDP rose by 0.2 percent in the euro area (EA19) and by 0.3 percent in the EU28 during the fourth quarter of 2018, compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union. In the third quarter of 2018, GDP had grown by 0.1 percent in the euro area and by 0.3 percent in the EU28.
Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 1.1 percent in the euro area and by 1.4 percent in the EU28 in the fourth quarter of 2018, after +1.6 percent and +1.8 percent respectively in the previous quarter.
Downgrades to the ECB’s economic forecasts are inevitable. As soon as they were published in December, the current set of projections already looked woefully optimistic. And at the policy meeting in January, the Governing Council acknowledged that subsequent economic data had been weaker than it expected, and also revised its assessment of the risks to the outlook, judging them to be skewed to the downside, Daiwa Capital Markets commented.
Nevertheless, comments last week from Irish Central Bank Governor and ECB Chief Economist-designate Philip Lane suggested that the December projections would need only “reasonably small adjustments”, a sentiment tallying with remarks of other Governing Council members. And it would be out of character for the ECB to make marked downward revisions, the report added.
Meanwhile, the German DAX remained tad 0.53 percent lower at 11,528.07 by 11:25GMT, while at 11:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 40.35 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex
