DAX Gains Ground on German, Eurozone Growth

The DAX index has posted losses in the Wednesday session. Currently, the index is trading at 12,277.50, up 0.67% since the Tuesday close. In Germany, Preliminary GDP slowed in the fourth quarter to 0.6%, but still matched the estimate. Final CPI declined 0.7%, also matching the forecast. Eurozone Flash GDP for Q4 remained steady at 0.6% for a third straight quarter, matching the estimate. In the US, the markets are expecting mixed inflation numbers. Core CPI is expected to expected to edge lower to 0.2%, while CPI is forecast to improve to 0.1%.

European markets have given a thumbs-up to German and Eurozone GDP reports. Both indicators showed respectable gains of 0.6% in the fourth quarter. On an annual basis, Eurozone GDP was up by 2.7%, underscoring the strong rebound in the eurozone economy in 2017. The DAX is marginally higher last week, after sliding 7.6% last week. In the banking sector, stocks are in green territory on Wednesday. Commerzbank has posted strong gains of 1.24%, and Deutsche Bank has gained 0.24%.

Investors across the globe, who endured a massive sell-off last week, will be keeping a close eye on US inflation indicators. Concern over higher inflation and additional rate hikes was a catalyst to the volatility in the stock markets, and any whiff of higher consumer inflation could again spook investors and send the markets into a tailspin. The new head of the Federal Reserve, Jerome Powell, sought to send a reassuring message on Tuesday, saying that the Fed is on alert to any risks to financial stability. However, it is clear that the Fed’s hand is limited when it comes to stock markets moves, and the volatility which we saw last week could resume at any time.

Economic Calendar

Wednesday (February 14)

  • 2:00 German Preliminary GDP. Estimate 0.6%. Actual 0.6%
  • 2:00 German Final CPI. Estimate -0.7%. Actual -0.7%
  • 3:00 German Buba President Weidmann Speaks
  • 5:00 Eurozone Flash GDP. Estimate 0.6%. Actual 0.6%
  • Tentative – German 30-year Bond Auction
  • 8:30 US CPI. Estimate 0.3%
  • 8:30 US Core CPI. Estimate 0.2%

Thursday (February 15)

  • 5:00 Eurozone Trade Balance. Estimate 22.4B

*All release times are EST

*Key events are in bold

DAX, Wednesday, February 14 at 6:35 EDT

Open: 12,315.50 High: 12,318.46 Low: 12,263.50 Close: 12,277.50

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.

EUR/USD – Euro Unchanged as German GDP, CPI Matches Forecasts

The euro has shown some movement in both directions but is unchanged in the Wednesday session.  Currently, the pair is trading at 1.2356, up 0.04% on the day. It’s a busy day for fundamentals, with key releases out of the eurozone and the US. In Germany, Preliminary GDP slowed to 0.6% in the fourth quarter, matching the estimate. Final CPI declined 0.7%, also matching the forecast. Eurozone Flash GDP for Q4 remained steady at 0.6% for a third straight quarter, matching the estimate. In the US, the markets are expecting mixed inflation numbers. Core CPI is expected to expected to edge lower to 0.2%, while CPI is forecast to improve to 0.1%. The US will also release retail sales reports. Retail Sales is forecast to slow to 0.2%, while Core CPI is forecast to accelerate to 0.5%. Traders should be prepared for movement from EUR/USD during the North American session.

The stock market sell-off has triggered some volatility in the currency markets, and this is causing concern at the ECB. Last week, ECB President Mario Draghi said that he is more confident that eurozone inflation is moving closer to the Bank’s target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro’s exchange rates. Draghi’s concerns about the exchange rate are likely even stronger, after the euro fell 1.6 percent last week. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are on the lookout for hints as to whether the ECB will normalize policy and wind up stimulus in September.

Global stock markets have steadied after last week’s turbulence, but investors remain wary. Wednesday’s US inflation numbers will be closely watched, as inflation fears was a key catalyst of the massive sell-off. The new head of the Federal Reserve, Jerome Powell, sought to send a reassuring message on Tuesday, saying that the Fed is on alert to any risks to financial stability. However, it is clear that the Fed’s hand is limited when it comes to stock markets moves, and the volatility which we saw last week could resume at any time.

The day of reckoning

 

EUR/USD Fundamentals

Wednesday (February 14)

  • 2:00 German Preliminary GDP. Estimate 0.6%. Actual 0.6%
  • 2:00 German Final CPI. Estimate -0.7%. Actual -0.7%
  • 3:00 German Buba President Weidmann Speaks
  • 4:00 Italian Preliminary GDP. Estimate 0.4%. Actual 0.3%
  • 5:00 Eurozone Flash GDP. Estimate 0.6%. Actual 0.6%
  • 5:00 US Industrial Production. Estimate 0.1%. Actual 0.4%
  • Tentative – German 30-year Bond Auction
  • 8:30 US CPI. Estimate 0.3%
  • 8:30 US Core CPI. Estimate 0.2%
  • 8:30 US Core Retail Sales. Estimate 0.2%
  • 8:30 US Retail Sales. Estimate 0.5%
  • 10:00 US Business Inventories. Estimate 0.3%
  • 10:30 US Crude Oil Inventories. Estimate 2.8M

Thursday (February 15)

  • 5:00 Eurozone Trade Balance. Estimate 22.4B
  • 8:30 US PPI. Estimate 0.4%
  • 8:30 US Empire State Manufacturing Index. Estimate 17.7
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.5
  • 8:30 US Unemployment Claims. Estimate 229K

*All release times are GMT

*Key events are in bold

 

EUR/USD for Wednesday, February 14, 2018

EUR/USD for February 14 at 6:00 EDT

Open: 1.2351 High: 1.2393 Low: 1.2346 Close: 1.2356

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2092 1.2200 1.2286 1.2357 1.2481 1.2569

EUR/USD inched higher in the Asian session and has retracted in European trade

  • 1.2286 is providing support
  • 1.2357 was tested earlier in resistance and is under strong pressure

Further levels in both directions:

  • Below: 1.2286, 1.2200, 1.2092 and 1.1961
  • Above: 1.2357, 1.2481 and 1.2569
  • Current range: 1.2286 to 1.2357

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Wednesday session. Currently, short positions have a majority (54%), indicative of EUR/USD breaking out and moving lower.

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.

DAX Dips as Investors Still Skeptical

The DAX index has posted losses in the Tuesday session. Currently, the index is trading at 12,230.44, down 0.44% on the day. On the release front, there are no German or Eurozone indicators on the schedule for a second straight day.

US stock markets posted gains on Monday, raising hopes that last week’s correction is over. However, European investors appear to be more skeptical, as European markets are in red territory. The DAX has dropped 0.40% on Tuesday, erasing the gains from Monday. It’s been a rough February for investors, as the DAX has shed 7.6% since the start of the month. Investors will likely remain on the sidelines until there is stronger optimism that the massive sell-off is over.

German President Angela Merkel has reached an agreement with the socialist SDP to form a new government, but the price was steep, as the SDP extracted major concessions from Merkel, notably control of the powerful finance ministry. This will likely mark a shift in Germany’s eurozone policy, which had been marked by a conservative stance under former finance minister Wolfgang Schaeuble. The weaker members of the eurozone, such as Greece, will likely find a more sympathetic ear for financial help from the SDP than they did from Schauble. Many conservatives fear that the Olaf Scholz, who is expected to become finance minster, will not be as fiscally responsible as Schaeuble. On the weekend Scholz said that Germany should not dictate economic policies to other eurozone members. The coalition agreement still requires the consent of a majority of the 464,000 members of the SDP, and if the deal is rejected, Germany will likely be headed to new elections.

Economic Calendar

Tuesday (February 13)

  • There are no German or eurozone events

Wednesday (February 14)

  • 2:00 German Preliminary GDP. Estimate 0.6%
  • 2:00 German Final CPI. Estimate -0.7%
  • 3:00 German Buba President Weidmann Speaks
  • 5:00 Eurozone Flash GDP. Estimate 0.6%

*All release times are EST

*Key events are in bold

DAX, Tuesday, February 13 at 6:15 EDT

Open: 12,262.86 High: 12,298.96 Low: 12,1206.18 Close: 12,234.44

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.

US Stock Market Fall Sends DAX Lower

The DAX index has posted sharp losses in the Thursday session. Currently, the index is trading at 12,453.53, down 1.09% on the day. On the release front, Germany’s trade surplus narrowed to EUR 21.4 billion, just shy of the estimate of EUR 21.5 billion.

Global stock markets have shown strong volatility this week, and the DAX continues to see red. February has been awful, with the DAX shedding 5.9 percent. The week started with the Dow Jones posting its biggest one-day loss, and losses in US stock markets have pushed European markets lower. Earlier this week, the DAX dropped to its lowest level since early September. The catalyst for the current turbulence is investor concern that inflation could rise in the US, which in turn would trigger additional rate hikes from the Federal Reserve. This would make dollar-denominated assets more attractive and weigh on the European stock markets.

Market Jitters Remain/strong

After months of political uncertainty, Germany appears on the verge of forming a new government. On Wednesday, the socialist SDP and Angela Merkel’s conservatives announced that they had finalized a coalition agreement. In the last government, the SDP was the junior partner of the conservatives, but this time around the SDP has extracted major concessions from Merkel, notably control of the powerful finance ministry. This will likely mark a shift in Germany’s eurozone policy, which had been marked by a conservative stance under former finance minister Wolfgang Schaeuble. The weaker members of the eurozone, such as Greece, will likely find a more sympathetic ear for financial help from the SDP than they did from Schauble. The coalition agreement still requires the consent of a majority of the 464,000 members of the SDP, but is expected to pass this final hurdle.

 

Economic Calendar

Thursday (February 8)

  • 2:00 German Trade Balance. Estimate 21.5B. Actual 21.4B
  • 3:45 German Buba President Weidmann Speaks
  • 4:00 ECB Economic Bulletin

*All release times are GMT

*Key events are in bold

 

DAX, Thursday, February 8 at 6:15 EDT

Open: 12,490.50 High: 12,500.23 Low: 12,412.00 Close: 12,453.53

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.

EUR/USD – Euro Slips to 2-Week Low as Stock Market Turmoil Continues

The euro has edged downwards on Wednesday. Currently, the pair is trading at 1.2228, down 0.29% on the day. On the release front, the Germany’s trade surplus narrowed to EUR 21.4 billion, just shy of the estimate of EUR 21.5 billion. In the US, the key event is unemployment claims, which is expected to edge up 232 thousand. On Friday, France releases Industrial Production.

The euro has been under pressure for most of the week, and is down 1.8 percent against the dollar. The greenback has benefited from sharp volatility in global stock markets this week. The week started with the Dow Jones posting its biggest one-day loss, and the markets have been choppy throughout the week. US markets were in the red on Wednesday, and this has weighed on European stock markets and the euro in the Thursday session. Investors are concerned that inflation could rise in the US, which in turn would trigger additional rate hikes from the Fed. This would make the US dollar more attractive against the euro and other currencies.

After months of political uncertainty, Germany appears on the verge of forming a new government. On Wednesday, the socialist SDP and Angela Merkel’s conservatives announced that they had finalized a coalition agreement. In the last government, the SDP was the junior partner of the conservatives, but this time around the SDP has extracted major concessions from Merkel, notably control of the powerful finance ministry. This will likely mark a shift in Germany’s eurozone policy, which had been marked by a conservative stance under former finance minister Wolfgang Schaeuble. The weaker members of the eurozone, such as Greece, will likely find a more sympathetic ear for financial help from the SDP than they did from Schauble. The coalition agreement still requires the consent of a majority of the 464,000 members of the SDP, but is expected to pass this final hurdle.

Market Jitters Remain/strong

EUR/USD Fundamentals

Thursday (February 8)

  • 2:00 German Trade Balance. Estimate 21.5B. Actual 21.4B
  • 3:45 German Buba President Weidmann Speaks
  • 4:00 ECB Economic Bulletin
  • 8:30 US Unemployment Claims. Estimate 232K
  • Tentative – US Mortgage Delinquencies
  • 10:30 US Natural Gas Storage. Estimate -116B
  • 13:01 US 30-year Bond Auction

Friday (February 9)

  • 2:45 French Industrial Production. Estimate 0.1%

*All release times are GMT

*Key events are in bold

 

EUR/USD for February 8, 2018

EUR/USD for February 8 at 5:45 EDT

Open: 1.2264 High: 1.2295 Low: 1.2232 Close: 1.2234

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1961 1.2092 1.2200 1.2286 1.2357 1.2481

EUR/USD edged higher in the Asian session. The pair has reversed directions in European trade and is moving downards

  • 1.2200 has switched to a support role after losses by EUR/USD on Tuesday
  • 1.2286 is the next resistance line

Further levels in both directions:

  • Below: 1.2200, 1.2092 and 1.1961
  • Above: 1.2286, 1.2357, 1.2481 and 1.2569
  • Current range: 1.2200 to 1.2286

OANDA’s Open Positions Ratio

EUR/USD ratio has shown strong movement towards long positions. Currently, short positions have a majority (57%), indicative of EUR/USD reversing directions and moving higher.

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.

DAX Slides as US Stock Markets See Red

The DAX index continues to lose ground this week. In the Tuesday session, the index is trading at 12,454.51, down 1.88% on the day. On the release front, German Factory Orders impressed with a gain of 3.8%, crushing the estimate of 0.6%. On Wednesday, Germany releases Industrial Production.

The DAX ended last week with losses, as a sharp decline in Deutsche Bank shares sent European stock markets lower on Friday. The DAX declined 4.2% last week, and the slide continues, as the index has shed another 2.4% this week. The Dow Jones posted its biggest loss in one day on Monday, losing 1,500 points at one stage. The index ended the day down 4.6%, and the downward trend has continued in the Asian and European markets on Tuesday. What happened? Some analysts are pointing to the changing of the guard at the Federal Reserve, with Jerome Powell replacing outgoing chair Janet Yellen on Saturday. However, Powell is not expected to change current monetary policy, so it’s unclear how Powell would have rubbed the markets the wrong way before uttering a word as head of the Fed.

More likely, the stock markets woes can be attributed to strong US nonfarm payrolls and wage growth reports, which were released on Friday. Investors fear that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets. Adding to investors’ concerns, there are expectations that the ECB and possibly the Bank of Japan could raise rates late in 2018, which would push up the euro and yen and weigh on the stock markets.

Algo Trading Blamed for Monday’s Market Crash

Dow Suffers Biggest Ever One Day Points Loss

The German economy continues to shine, despite the ongoing coalition negotiations, which have dragged on since September. A spokesman for the SPD party, which is negotiating with Angela Merkel’s conservative bloc, said on Tuesday that a deal is “90-95%” done. For her part, Merkel has said that she is willing to make painful concessions in order to form a government. Both parties have stated that they want to reach an agreement on Tuesday. If there is an announcement later in the day, the euro could move higher.

Economic Calendar

Tuesday (February 6)

  • 2:00 German Factory Orders. Estimate 0.6%. Actual 3.8%
  • 4:00 German Buba President Weidmann Speaks
  • 4:10 Eurozone Retail PMI

Wednesday (February 7)

  • 2:00 German Industrial Production. Estimate -0.4%

*All release times are GMT

*Key events are in bold

DAX, Tuesday, February 6 at 6:05 EDT

Open: 12,203.50 High: 12,483.29 Low: 12,190.19 Close: 12,451.50

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.

DAX Drops to 17-Week Low, Eurozone Retail Sales Slide

The DAX remains under pressure, and has started the week with strong losses. In the Monday session, the index is trading at 12,659.00 down 0.98% since the Friday close. On the release front, Eurozone and German Services PMIs improved in January. Both readings beat their estimates. Eurozone retail sales declined 1.1%, matching the forecast. Later in the day, ECB President Mario Draghi testifies on the ECB’s Annual Report for 2016 before the European Parliament. On Tuesday, Germany releases Factory Orders.

It was a dismal week for the DAX, which slipped 4.3% last week. On Friday, Deutsche Bank shares dropped more than 5%, sending European stock markets into red territory, and the DAX is at its lowest level since September 26. The picture for Deutsche Bank is not a pretty one, as the stock price is at its lowest level since November, and the bank posted its third straight annual loss in 2017. A decline in investment bank revenue and the US tax reform bill contributed to a weak fourth quarter for Deutsche Bank shares.

With the eurozone economy continuing to perform well, there has been speculation that the ECB could wind up its asset-purchase program (QE) in September and shift to a normative policy, and perhaps raise interest rates. However, Mario Draghi and other ECB members have taken pains to reiterate that the Bank is in no rush to end QE. Last week, executive board member Benoit Coeure joined the chorus, saying that although QE “will not last forever” policymakers were in agreement “that we have to be patient and prudent because we are not yet where we want to be in terms of inflation”. Investors would be well advised to keep a close eye on eurozone and German inflation numbers, as asset purchases could be extended beyond September if inflation remains well below the ECB target of around 2.0%.

Economic Calendar

Monday (February 5)

  • 3:55 German Services PMI. Estimate 57.0. Actual 57.3
  • 4:00 Eurozone Final Services PMI. Estimate 57.6. Actual 58.0
  • 4:30 Eurozone Sentix Investor Confidence. Estimate 33.2. Actual 31.9
  • 5:00 Eurozone Retail Sales. Estimate -1.1%. Actual -1.1%
  • 9:45 Eurozone Final Services. Estimate 53.3
  • 11:00 ECB President Mario Draghi Speaks

Tuesday (February 6)

  • 2:00 German Factory Orders. Estimate 0.6%
  • 4:00 German Buba President Weidmann Speaks

*All release times are GMT

*Key events are in bold

 

DAX, Monday, February 5 at 7:15 EDT

Open: 12,665.04 High: 12,751.83 Low: 12,621.85 Close: 12,659.00

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.

EUR/USD – Euro Yawns as German, Eurozone Services PMIs Improve

The euro is trading sideways on Monday, after an uneventful week. Currently, the pair is trading at 1.2463, up 0.06% on the day. On the release front, Eurozone and German Services PMIs improved in January. Both readings beat their estimates. Eurozone retail sales declined 1.1%, matching the forecast. Later in the day, ECB President Mario Draghi testifies on the ECB’s Annual Report for 2016 before the European Parliament. In the US, the sole event on the calendar is ISM Non-Manufacturing PMI. The indicator is expected to rise to 56.5 points. On Tuesday, Germany releases Factory Orders and the US publishes JOLTS Job Openings.

With the eurozone economy continuing to perform well, there has been speculation that the ECB could wind up its asset-purchase program (QE) in September and shift to a normative policy, and perhaps raise interest rates. However, Mario Draghi and other ECB members have taken pains to reiterate that the Bank is in no rush to end QE. On Wednesday, executive board member Benoit Coeure joined the chorus, saying that although QE “will not last forever” policymakers were in agreement “that we have to be patient and prudent because we are not yet where we want to be in terms of inflation”. Investors would be well advised to keep a close eye on eurozone and German inflation numbers, as asset purchases could be extended beyond September if inflation remains well below the ECB target of around 2.0%.

There was a changing of the guard at the Federal Reserve on the weekend, as Jerome Powell took over as chair, replacing Janet Yellen. On Friday, Yellen waxed optimistic about the economy, saying that strong growth, a red-hot labor market and increased wage growth would require the Fed to gradually raise interest rates. Powell is expected to continue to Yellen’s policies, so the markets are not expecting any dramatic shifts. However, the massive US tax cut will have a strong impact on the US economy, and the markets will be looking to the Fed for guidance. If the Fed sounds optimistic about the tax reform package, the US dollar could move higher.

EUR/USD Fundamentals

Monday (February 5)

  • 3:15 Spanish Services PMI. Estimate 55.2. Actual 56.9
  • 3:45 Italian Services PMI. Estimate 56.1. Actual 57.7
  • 3:50 French Final Services PMI. Estimate 59.3. Actual 59.2
  • 3:55 German Services PMI. Estimate 57.0. Actual 57.3
  • 4:00 Eurozone Final Services PMI. Estimate 57.6. Actual 58.0
  • 4:30 Eurozone Sentix Investor Confidence. Estimate 33.2. Actual 31.9
  • 5:00 Eurozone Retail Sales. Estimate -1.1%. Actual -1.1%
  • 9:45 Eurozone Final Services. Estimate 53.3
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.5
  • 11:00 ECB President Mario Draghi Speaks
  • Tentative – US Loan Officer Survey

Tuesday (February 6)

  • 2:00 German Factory Orders. Estimate 0.6%
  • 4:00 German Buba President Weidmann Speaks
  • 4:10 Eurozone Retail PMI
  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M

*All release times are GMT

*Key events are in bold

 

EUR/USD for February 5, 2018

EUR/USD for February 5 at 6:30 EDT

Open: 1.2456 High: 1.2475 Low: 1.2424 Close: 1.2465

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2200 1.2286 1.2357 1.2481 1.2569 1.2677

EUR/USD has shown little movement in the Asian and European sessions

  • 1.2357 is providing support
  • 1.2481 is under pressure in resistance. It could break in the Monday session

Further levels in both directions:

  • Below: 1.2357, 1.2286, 1.2200 and 1.1961
  • Above: 1.2481, 1.2569 and 1.2677
  • Current range: 1.2357 to 1.2481

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement in the Monday session. Currently, short positions have a majority (62%), indicative of EUR/USD reversing directions and moving lower.

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.