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Home/FX/Indices/Newsfeed

DAX slides as Trump slaps tariffs on China

June 18, 2018 Share Print 0

The DAX index has started the week with sharp losses, continuing the downward trend seen on Friday. Currently, the DAX is at 12,834, down 1.35% on the day. On the release front, there are no German or eurozone indicators. The highlight of the day is the opening of the ECB Forum, which kicks off with a speech from ECB President Mario Draghi. On Tuesday, Draghi will participate in a panel discussion. As well, the eurozone releases current account, with the surplus expected to drop to EUR 30.3 billion.

It’s been a roller-coaster ride for the DAX, which soared on Thursday, but quickly reversed directions. Investor risk appetite has waned, after U.S President Trump imposed further tariffs on some $50 billion of Chinese products. China has promised to retaliate against U.S imports, as trade ties between the world’s two largest economies continue to deteriorate. With the U.S recently slapping tariffs on the E.U and the NAFTA talks in pause mode, it is no wonder that investor anxiety has risen. If the trade war between the U.S and its partners continues to escalate, traders can expect global equities to continue to lose ground.

The DAX jumped 1.6% on Thursday, but has since given up most of these gains. The markets jumped after the ECB policy meeting, when the ECB said that it had no intention of raising interest rates prior to the second half of 2019. The ECB pledged to taper its bond-purchase program to EUR 15 billion/mth, in October, down from the current pace of EUR 30 billion/mth. The program will wind up at the end of the year. However, investors detected a ‘dovish flavor’ to the announcement, as the ECB added that interest rates would remain steady “at least through the summer of 2019”, giving policymakers plenty of wiggle-room to delay any rate hikes. The markets were anticipating a rate hike shortly after the end of the bond-purchase program, so this announcement was a disappointment. ECB head Mario Draghi sounded dovish in his press conference, saying that the eurozone economy was facing “increasing uncertainty”. Draghi was likely referring to the G-7 meeting which ended in disarray as well as the election of a euro-sceptic government in Italy. The ECB also lowered its growth forecast for the eurozone to 2.1%, down from 2.4% earlier this year.

  Mario Draghi, the master of the dark art of central bank communiqué

  Dollar rises on falling risk appetite

Monday (June 18)

  • 6:00 German Buba Monthly Report
  • 13:30 ECB President Mario Draghi Speaks

Tuesday (June 19)

  • 4:00 ECB President Mario Draghi Speaks
  • 4:00 Eurozone Current Account. Estimate 30.3B

*All release times are DST

*Key events are in bold

DAX, Monday, June 18 at 7:35 DST

Previous Close: 13,8010 Open: 12,955 Low: 13,824 High: 13,982 Close: 12,834

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.

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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

+Kenny Fisher

Kenny Fisher

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DAX, DAX 30, DE 30, ECB Current Account, ECB President Mario Draghi, EUR, FX, German Buba Monthly Report
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