DAX Edges Higher as German GDP, Business Climate Impresses

The DAX index has edged upwards on Tuesday, reversing the losses which marked the Monday session. Currently, the DAX is trading at 12,679.50 points. On the release front, German and eurozone numbers were solid. German Final GDP posted a gain of 0.6%, matching the forecast. There was positive news from the manufacturing sector, as German and Eurozone Manufacturing PMIs beat their estimates. As well, German Ifo Business Climate rose to 114.6, easily beating the estimate of 113.1 points.

Germany’s economy continues to perform well, and this has meant stronger growth for the euro-area. German numbers continue to impress. Final GDP for the first quarter remained at a respectable 0.6%, unchanged from the Preliminary GDP reading. The Ifo Business Climate report sparkled, climbing to 114.6, marking its highest level since 1991. As well, the manufacturing sector continues to expand, as German Manufacturing PMI improved to 59.4, its highest reading since February 2011. Exports and manufacturing propelled the economy in the first quarter, and these sectors should remain strong, so we can expect strong economic expansion in the second quarter as well. The strong manufacturing numbers in Germany have also boosted eurozone numbers, as the manufacturing sector continues to expand. Eurozone Manufacturing PMI climbed to 57.0 in April, the ninth straight month that the indicator has improved.

Greece hasn’t been in thee headlines for quite some time, but that could change. EU finance ministers met on Monday, and a key issue was debt relief for Greece. However, the ministers could not reach an agreement, and opted to try and hammer out an agreement at the June meeting. The uncertainty caused by the delay will only exacerbate concerns about the fragile Greek economy. Greece has undergone a severe austerity plan and understandably, the Greek government is reluctant to adopt further painful measures. Greece could be headed on a collision course with the EU, if the latter insists that the further reforms are needed. German Finance Minister Wolfgang Schaeuble praised the reforms implemented by Greece as “remarkable”, but insisted that Greece must take further steps before the EU provides further financial aid. Greek’s debt woes once resulted in the country almost leaving the eurozone, and if the EU holds up aid, the euro could lose ground.

Economic Calendar

Tuesday (May 23)

  • 3:30 German Final GDP. Estimate 0.6%. Actual 0.6%
  • 3:00 French Flash Manufacturing PMI. Estimate 55.2. Actual 54.0
  • 3:00 French Flash Services PMI. Estimate 56.8. Actual 58.0
  • 3:30 German Flash Manufacturing PMI. Estimate 58.0. Actual 59.4
  • 3:30 German Flash Services PMI. Estimate 55.5. Actual 55.2 
  • 4:00 German Ifo Business Climate. Estimate 113.1. Actual 114.6
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 56.5. Actual 57.0
  • 4:00 Eurozone Flash Services PMI. Estimate 56.5. Actual 56.2

Wednesday (May 24)

  • 2:00 GfK German Consumer Climate. Estimate 10.2
  • Tentative – German 10-y Bond Auction
  • 8:45 ECB President Mario Drahgi Speaks

*All release times are EDT

*Key events are in bold

 

DAX, Tuesday, May 23 at 7:05 EDT

Open: 12,594.50 High: 12,703.50 Low: 12,589.00 Close: 12,679.50

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.