DAX Higher Despite Soft Inflation Reports

The DAX index has posted gains in the Friday session. Currently, the DAX is trading at 12,417, up 0.58% on the day. On the release front, the focus was on inflation indicators. German Wholesale Price Index declined 0.3%, missing the estimate of +0.2%. Eurozone Final CPI also disappointing, as the reading of 1.1% was shy of the forecast of 1.3%

Eurozone economic conditions continue to improve, but inflation indicators have failed to keep up. Inflation remains well below the ECB target of just under 2 percent despite the stronger eurozone economy, led by a robust German economy. In fact, Eurozone Final CPI has been dropping in recent months, and this worrisome trend continued in February, when the indicator dropped to 1.1%, down from 1.3% a month earlier. This marked the weakest gain since December 2016. On Wednesday, inflation was on the mind of ECB President Mario Draghi, who expressed caution about inflation. Draghi said that the ECB still needed to see evidence that inflation was gaining strength before there could be any talk about a change in monetary policy. In the meantime, the ECB would remain “patient, persistent and prudent”. Stronger economic conditions have led to growing speculation that the ECB will wind up its stimulus program in September. However, there is still plenty of slack in the economy, and coupled with low inflation, Draghi can afford to remain cautious and maintain current monetary policy for some time.

After months of negotiations, Germany has a government in place. However, the news failed to elicit much of a response from German stock markets. Angela Merkel may have been all smiles as she was crowned to a fourth term this week, but this time she stumbled across the finish line, as opposed to previous wins, when she cruised to victory. Merkel’s stature has diminished after a poor showing in the election back in September, and she will preside over a fractured coalition. Merkel was forced to give the socialist SDP the powerful finance and foreign ministry portfolios, so we can expect the new government to be more supportive of eurozone integration, including more assistance for weaker eurozone members and less rigidity over spending and budgets.

Economic Calendar

Friday (March 16)

  • 3:00 German WPI. Estimate +0.2%. Actual -0.3%
  • 6:00 Eurozone Final CPI. Estimate 1.2%. Actual 1.1%
  • 6:00 Eurozone Final Core CPI. Estimate 1.0%. Actual 1.0%

*All release times are EST

*Key events are in bold


DAX, Friday, March 16 at 6:10 EDT

Prev. Close: 12,345 Open: 12,381 High: 12,428 Low: 12,358 Close: 12,417

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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