DAX Dips on Mixed German Data

The DAX has started the week with slight losses. Currently, the DAX is at 13,450.50, down 0.22% since the close on Thursday. On the release front, German Factory Orders gained 1.0%, above the estimate of -1.0%. German Services PMI slowed to 54.7, short of the estimate of 55.5 points. Eurozone Services PMI also softened, but the reading of 55.0 was just above the estimate of 54.9 points. As well, eurozone investor confidence and inflation reports beat the forecasts. On Tuesday, ECB President Mario Draghi speaks at an ECB forum in Frankfurt. Germany releases Industrial Production, and the eurozone publishes Retail PMI and retail sales.

The manufacturing sector has been an important factor in the improved eurozone economy, and October Manufacturing PMIs continue to point to expansion early in the fourth quarter. The German Manufacturing PMI held at 60.6, its highest level since April 2011. The German employment market remains robust, as unemployment rolls have declined for three straight months. Unemployment rolls have now dropped in all but two readings since June 2015.

Late last week, President Trump nominated Federal Reserve Governor Jerome Powell on Thursday to head the Federal Reserve. Powell will take over in February 2018, when Yellen’s term expires. The new chair is expected to hold the course with monetary policy, which has been marked by incremental and small rate hikes since December 2015. It’s all but a given that the Fed will raise interest rates in December, but the forecast for 2018 is less clear. If the US economy continues to grow at current levels, we could see up to three rate hikes next year. Powell will also be tasked with continuing to trim the Fed’s huge balance sheet of $4.2 billion. Last month, the Fed has started trimming the balance sheet by $10 billion/mth, but these cuts are expected to increase in size next year.

Economic Calendar

Monday (November 6)

• 2:00 German Factory Orders. Estimate -1.0% Actual +1.0%
• 3:55 German Final Services PMI. Estimate 55.2. Actual 54.7
• 4:00 Eurozone Final Services PMI. Estimate 54.9. Actual 55.0
• 4:30 Eurozone Sentix Investor Confidence. Estimate 31.2. Actual 34.0
• 5:00 Eurozone PPI. Estimate 0.4%. Actual 0.6%

Tuesday (November 7)

• 2:00 German Industrial Production. Estimate -0.7%
• 4:00 ECB President Mario Draghi Speaks
• 4:10 Eurozone Retail PMI
• 5:00 Eurozone Retail Sales. Estimate 0.6%

*All release times are GMT

*Key events are in bold

DAX, Monday, November 6 at 7:00 EDT

Open: 13,464.00 High: 13,472.50 Low: 13,441.75 Close: 13,450.50

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