DAX soars as Fed regional president calls for rate cut

The DAX has posted sharp gains in the Tuesday session. Currently, the index is at 11,909, up 0.99% on the day. In economic news, eurozone consumer inflation indicators disappointed. The estimate for annual inflation in May slowed to 1.2%, down from 1.7% in April. The core indicator also fell, dropping to 0.8%, after a reading of 1.2% in April. Both indicators missed their forecasts.

After a dismal month of May, the DAX has looked sharp in June, gaining 1.5% this week. Investors have flocked to the stock markets after James Bullard, president of the St. Louis Fed, said on Monday that the Federal Reserve should lower interest rates. Bullard argued that low inflation and the ongoing trade war with China were likely to result in an economic slowdown in the U.S. Bullard added that the current benchmark rate, which is at a range of 2.25% to 2.50%, is too high for current economic conditions, and recommended lowering rates in order to stabilize the economy. The dovish comments about lower rates have energized the blue-chip DAX index.

The week has started out with disappointing data in the eurozone. The estimate for consumer inflation slowed in May, a reflection of weaker economic activity in Germany as well as the rest of the eurozone. The downward slide continues for German and eurozone manufacturing PMIs, which have been mired in contraction territory for most of 2019. This is a result of ongoing trade tensions, which have reduced global demand for German and eurozone exports, and dampened the manufacturing sectors.

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Economic Calendar

Tuesday (June 4)

  • 5:00 Eurozone CPI Flash Estimate. Estimate 1.4%. Actual 1.2%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%. Actual 0.8%
  • 5:00 Eurozone Unemployment Rate. Estimate 7.7%. Actual 7.6%

*All release times are DST

*Key events are in bold

DAX, Tuesday, June 4 at 6:50 DST

Previous Close: 11,792 Open: 11,737 Low: 11,713 High: 11,920 Close: 11,909

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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.