DAX rally continues, but will German manufacturing PMI spoil the party?

The DAX index continues to roll and has posted gains of 1.2 percent this week. On Wednesday, the DAX is at 12,148, up 0.39% on the day. In economic news, eurozone CPI dipped to 0.8%, matching the forecast. The eurozone trade surplus jumped to EUR 19.5 billion in February, its highest level since April. On, Thursday, Germany and the eurozone release services and manufacturing PMIs.

The German manufacturing sector has taken a beating, courtesy of the global trade war which has dampened demand for German exports and hurt the country’s massive auto industry. This has resulted in recent declines in manufacturing PMI reports. The markets are braced for another soft score for March, with an estimate of 45.2 points. The services PMIs have been indicating healthy expansion, but more bad news from manufacturing could unnerve investors and send the euro downwards.

Investors reacted positively to a milestone reading from the German ZEW economic sentiment survey on Tuesday. The key indicator had been mired in negative territory for the past 12 months, and finally climbed into territory in April. The score of 3.1 points to slight optimism on the part of institutional investors and analysts. The eurozone indicator showed a similar trend, climbing to 4.5 points, its first gain since May. The improvement in investor mood is attributable to the Brexit extension, which will give the parties time until October to try to reach a resolution to the deadlock. The ZEW said that investors were hopeful that the global economy would develop “less poorly” than expected. At the same time, eurozone growth remains weak and Germany is expected to cut its growth forecast for 2019, a result of a drop in exports.

Risk on as China growth beats estimates

Economic Calendar

Wednesday (April 17)

  • 4:00 Eurozone Current Account. Estimate 33.2B. Actual 26.8B
  • 5:00 Eurozone Final CPI. Estimate 1.4%. Actual 1.4%
  • 5:00 Eurozone Final Core CPI. Estimate 0.8%. Actual 0.8%
  • 5:00 Eurozone Trade Balance. Estimate 16.8B. Actual 19.5B
  • 5:03 Italian Trade Balance. Estimate 2.62B. Actual 3.27B
  • 5:36 German 30-year Bond Auction. Actual 0.68/2.1

Thursday (April 18)

  • 2:00 German PPI. Estimate 0.2%
  • 3:30 German Flash Manufacturing PMI. Estimate 45.2
  • 3:30 German Flash Services PMI. Estimate 55.0
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 48.1
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 53.1

*All release times are DST

*Key events are in bold

DAX, Wednesday, April 17 at 8:00 EST

Previous Close: 12,101 Open: 12,110 Low: 12,087 High: 12,152 Close: 12,148

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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