German bunds slump as consumer inflation remains at over 3-year high; ECB in focus

The German bunds slumped Wednesday as the country’s consumer inflation held steady at over 3-year high in December, adding to pressure in the money market. 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 nearly 2 basis points to 0.32 percent, the long-term 30-year bond yields also plunged close to 2 basis points to 1.06 percent and the yield on short-term 2-year bond slid over 1/2 basis point to -0.72 percent by 08:50 GMT.

The final German consumer prices data confirmed provisional data that prices rose 0.7 percent m/m in December. The annual rate was also confirmed at 1.7 percent and the strongest rate since July 2013 with both figures in line with market expectations.

Moreover, 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, market will now wait for the release of producer price data, scheduled for January 20 by 07:00GMT.

Meanwhile, the German stock index DAX Index traded 0.16 percent up at 11,558.50 by 08:55 GMT, while at 8:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -50.41 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex