DAX volatility continues on trade tensions, Iran worries

The volatility continues in the equity markets, and the blue-chip DAX has not been immune from sharp swings this week. Currently, the DAX is at 12,208, down 0.83%. In economic news, eurozone Final CPI climbed 1.7%, matching the forecast. This was up sharply from 0.8% in March. Final Core CPI rose 1.3%, edging above the estimate of 1.2%. This marked the strongest gain since March 2013.

It’s been a roller-coaster ride on the DAX this week. The index started the week with a 1.5% plunge, but quickly recovered. On Thursday, the DAX soared 1.74%, only to reverse directions on Friday. The markets have been responding to developments in the trade war between the U.S. and China. The U.S. raised tariffs on $200 billion in Chinese goods late last week, and the Chinese responded this week with tariffs on $60 billion in U.S. products. The DAX responded with losses, but jumped on Thursday after the U.S. announced a 6-month moratorium on tariffs on European and Japanese cars. As well, an escalation in tensions between the U.S and Iran, which could lead to an interruption in oil shipments, has raised crude prices and sent equity markets sharply lower on Friday.

The eurozone economy has been struggling, and even the German locomotive has shown signs of weakness. The manufacturing sectors have been hit particularly hard, as the global trade war has dampened the appetite for German and European exports. The escalating tariff war between China and the U.S. has exacerbated matters, although there is some relief that the tariffs don’t take effect for several weeks, and the trade talks between the two countries are scheduled to resume shortly.

Markets steady after a weak week

Fluid situations

Economic Calendar

Friday (May 17)

  • 5:00 Eurozone Final CPI. Estimate 1.7%. Actual 1.7%
  • 5:00 Eurozone Final Core CPI. Estimate 1.2%. Actual 1.3%

*All release times are DST

*Key events are in bold

DAX, Friday, May 17 at 6:50 DST

Previous Close: 12,310 Open: 12,257 Low: 12,190 High: 12,271 Close: 12,208

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
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.