DAX Rally Pauses After Hot Start to Week

The DAX index has posted strong gains this week, but is subdued on Wednesday. Currently, the DAX is at 13,162.50, down 0.02% on the day. The DAX has started the week in fine form, up 1.8 percent. On the release front, the sole eurozone indicator is Consumer Confidence, which is expected to remain at -1 points. On Thursday, Germany and the Eurozone release manufacturing PMI reports, and Germany will publish final GDP. The ECB will release the summary from its October policy meeting.

The political deadlock continues in Germany, as President Angela Merkel faces her toughest challenge since coming to power 12 years ago. With the Free Democratic Party pulling out of coalition talks on the weekend, Merkel appears unable to form a coalition government. Merkel has said she would rather hold another election than try to govern with a shaky minority government. President Frank-Walter Steinmeier has urged the parties to redouble their efforts in order to reach an agreement, warning that another election would cause uncertainty in German as well as Europe. The crisis in the eurozone’s largest economy could paralyze the European Union, as Merkel has become the unofficial leader of the bloc. Euro-supporters such as French President Emmanuel Macron have ambitious plans to strengthen European integration, but this will have to wait until Merkel can straighten out her domestic challenges.

ECB head Mario Draghi spoke before a European Parliament Committee on Monday, and sounded optimistic about the eurozone economy. Draghi said that the ECB continues to see signs that the recovery is continuing. Economic growth continues to point upwards, and employment is at a record high. As for inflation, Draghi was optimistic, saying he was confident that wage growth will increase and drive underlying inflation. Still, Draghi acknowledged that inflation has “yet to show convincing signs of a self-sustained upward trend.”

 

Economic Calendar

Wednesday (November 22)

  • Tentative – German 30-year Bond Auction
  • 10:00 Eurozone Consumer Confidence. Estimate -1
  • 14:00 US FOMC Meeting Minutes

Thursday (November 23)

  • 2:00 German Final GDP. Estimate 0.8%
  • 3:30 German Flash Manufacturing PMI. Estimate 60.4
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 58.3
  • 7:30 ECB Monetary Policy Meeting Accounts

*All release times are GMT

*Key events are in bold

 

DAX, Wednesday, November 22 at 7:40 EDT

Open: 13,174.50 High: 13,192.50 Low: 13,110.50 Close: 13,163.00

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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.