German bunds trade range bound in subdued session; ECB maintains policy stance

[Corrected] The German bunds traded range bound in a subdued trading session Friday amid lack of major domestic events. Also, investors remain keen to watch the U.S. President-elect Donald’s Trump’s Inauguration Ceremony later in the day, for further direction in the debt market.

The yield on the benchmark 10-year bond, which moves inversely to its price, hovered around 0.38 percent, the long-term 30-year bond yields also rose nearly 3 basis points to 1.15 percent and the yield on short-term 2-year bond also traded flat at -0.68 percent by 09:00 GMT.

The European Central Bank in its first monetary policy meeting of 2017 on Thursday maintained key interest rates and its bond-buying program unchanged, as expected. Also, the European Central President Mario Draghi concluded that the ECB is unconvinced by the recently-higher inflation data, and that no further withdrawal of stimulus is being contemplated yet.

The ECB maintained that plans to scale back asset purchases between April-December, 2017 did not constitute tapering and this wasn’t discussed at yesterday’s rate review. Instead, the shift was an effort to recalibrate policy in light of receding deflationary risks.

Lastly, markets will now wait for the release of manufacturing PMI and business confidence data, scheduled for release next week.

Meanwhile, the German stock index DAX Index traded 0.12 percent up at 11,610.50 by 08:55 GMT, while at 8:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 47.67 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex