DAX Soars to 4-Week High on Brexit Progress

The DAX index has posted sharp gains in the Friday session, and is poised to record a third straight winning week. Currently, the DAX is at 13,201.00, up 1.26% on the day and at its highest level since November 9. Financial stocks have surged, as Commerzbank and Deutsche Bank have climbed 2.87% and 3.07%, respectively.

In economic news, Germany’s trade surplus fell to EUR 19.9 billion, missing the estimate of EUR 22.0 billion. This marked a 3-month low. In the US, the focus is on employment numbers, led by Nonfarm payrolls. The indicator is expected to come in at 198 thousand, compared to the previous reading of 261 thousand.

Are the Brexit talks, which have been mired in the mud for months, on track at long last? Apparently yes, after EU Commissioner Jean-Claude Juncker announced on Friday that sufficient progress had been made on non-trade issues. If the EU accepts this recommendation, the sides will then move to trade talks. What has held up the talks until now? The two non-trade sticking points have been the status of the Irish border and the role of the European Court of Justice after Brexit. Ireland wants some arrangement whereby EU regulations also apply to Northern Ireland, but the small DUP party, which is keeping the May government afloat, is against any steps which could be seen as separating Northern Ireland from the UK mainland. A solution that will satisfy the UK, the EU and the DUP over the Irish border has still not been reached. Another thorny issue is whether the European Court of Justice will apply to European citizens in the UK after Brexit. While the EU is in favor of the court having authority over these citizens, many British lawmakers feel that such a move would undermines British sovereignty. After months of difficult talks, moving on to trade issues would be a major breakthrough, especially for embattled Prime Minister May, who has been heavily criticized for her handling of the Brexit negotiations.

 

Economic Calendar

Friday (December 8)

  • 2:00 German Trade Balance. Estimate 22.0B. Actual 19.9B
  • 8:30 US Nonfarm Employment Change. Estimate 198K

*All release times are GMT

*Key events are in bold

 

DAX, Friday, December 8 at 6:55 EDT

Open: 13,157.50 High: 13,242.50 Low: 13,137.50 Close: 13,201.00

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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.