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DAX boosted by car maker shares on talk of tariff deal

The DAX index has posted strong gains in the Thursday session. Currently, the DAX is at 12,505, up 1.58% on the day. On the release front, German Factory Orders jumped 2.6%, crushing the estimate of 1.1%. Eurozone Retail PMI ticked higher to 51.8 points. Later in the day, the Federal Reserve will release the minutes of the June policy meeting.

The escalating trade war between the U.S and the EU has raised concerns that the eurozone export sector could hit some significant headwinds. President Trump has threatened to impose tariffs of 20 percent on European car imports if the EU does not remove their tariffs on U.S. automobiles. The EU would clearly prefer not to engage in a full-blown tariff war with the United States. European officials are examining the possibility of a tariff-cutting agreement between the world’s largest car exporters. In essence, this would allow the EU and the U.S to reach a deal on automobile tariffs without going through the World Trade Organization. On Thursday, automobile manufacturers are sharply higher on the DAX index. BMW is up 4.97%, Daimler has climbed 4.58% and Volkswagen has jumped 4.79%.

Chancellor Angela Merkel is working overtime to save her coalition, and the latest crisis she is facing is over migration policy. Interior Minister Horst Seehofer had threatened to resign over the migration agreement that EU leaders reached in Brussels last week, but has decided to remain in the government. Merkel’s proposal involves setting up special transit centers at the border with Austria and having refugees return to EU countries were they had first registered, but Austria has expressed concern with the plan. The EU remains split on migration policy, and if Germany’s political crisis continues, European equity markets could fall.

  Markets on hold, eyeing tariff implementation [1]

  Big Trouble in Big China ? [2]

Economic Calendar

Wednesday (July 4)

Thursday (July 5)

*All release times are DST

*Key events are in bold

DAX, Thursday, July 5 at 7:50 DST

Previous Close: 12,317 Open: 12,336 Low: 12,336 High: 12,514 Close: 12,503

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 [6]

Currency Analyst at Market Pulse [7]
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.
Kenny Fisher

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