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The DAX index is showing little movement in the Tuesday session. Currently, the DAX is at 12,808, up 0.08% on the day. In economic news, German retail sales rebounded with a gain of 1.2%, edging above the estimate of 1.1%. In the eurozone, CPI Flash Estimate edged up to 2.1%, above the forecast of 2.1%. Core CPI Flash Estimate gained 1.2%, above the forecast of 1.1%. Eurozone Preliminary Flash GDP dipped to 0.3%, shy of the estimate of 0.4%.

As the locomotive of Europe, Germany’s economic data is closely scrutinized by investors and is a bellwether of the health of the eurozone economy. Retail sales have shown mostly declines in 2018, pointing to weak consumer spending. However, after a sharp 2.1% decline in May, there was a strong rebound in June, with a gain of 1.2%. On Monday, Preliminary CPI improved with a gain of 0.3% in July, up from 0.1% a month earlier. The reading was just shy of the forecast of 0.4%. In the eurozone, the inflation estimate for July ticked higher, but the GDP gain of 0.3% was a disappointment. The reading missed the estimate and marked the smallest gain since Q3 of 2016. The eurozone economy hit some headwinds in the first quarter, but second-quarter data has been better and the ECB remains on track to wind up its bond-purchase program at the end of the year. The massive stimulus program gets mixed marks, as the eurozone economy is in a growth stage, but inflation remains well below the ECB target of just below the 2 percent level. On Wednesday, the focus will be on manufacturing PMIs, with both Germany and the eurozone expected to show stronger expansion in the July readings.

  Commodities Weekly: No traction for commodities as the dollar softens

Economic Calendar

Tuesday (July 31)

  • 2:00 German Retail Sales. Estimate 1.1%
  • 3:55 German Unemployment Change. Estimate -10K
  • 5:00 Eurozone CPI Flash Estimate. Estimate 2.0%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%
  • 5:00 Eurozone Preliminary Flash GDP. Estimate 0.4%
  • 5:00 Eurozone Unemployment Rate. Estimate 8.3%

*All release times are DST

*Key events are in bold

DAX, Tuesday, July 31 at 7:50 DST

Previous Close: 12,798 Open: 12,798 Low: 12,738 High: 12,826 Close: 12,808

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The DAX index has posted slight losses in the Monday session. Currently, the DAX is at 12,845, down 0.18% on the day. On the release front, today’s key event is German Preliminary CPI, which is expected to climb to 0.4%. Investors will be keeping a close eye on Tuesday’s indicators. Germany releases retail sales and the eurozone publishes CPI and GDP reports.

The DAX had one its best weeks of the year, climbing 2.8 percent and touching its highest level since mid-June. Investors responded positively to a meeting between EU Commission President Jean-Claude Juckner and U.S. President Trump that went better than expected. The two leaders agreed to take concrete steps to eliminate tariffs and improve the trade relationship between the U.S and the EU, which has been battered in recent weeks. Most importantly, Trump agreed to hold off on threatened tariffs against European car manufacturers, which pushed car manufacturers and bank shares higher and boosted the DAX.

It was more of the same from the ECB, which maintained its monetary policy at its Thursday policy meeting. The main refinancing rate remained at 0.0%, where it has been pegged since January 2016. In a policy statement, policymakers reiterated that rates would remain at current levels “through the summer of 2019”, and “as long as necessary to boost inflation to the target of just under 2.0%. There has been some quibbling among analysts as to the exact meaning of “through the summer”, but what is clear is that the ECB plans to keep rates at a flat 0.00% after winding up its bond-purchase scheme at the end of the year. Low interest rates are bullish for stocks, and the DAX responded with gains on Thursday after the ECB statement. Still, a rate hike seems likely sometime in 2019. The exact timing of a rate increase will depend on the strength of the eurozone economy and inflation levels – if the second half of 2018 is marked by stronger growth and higher inflation, there will be pressure on the ECB to raise rates earlier rather than later in 2019.

  Dollar marks time in Asia as traders consider a busy data week

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Economic Calendar

Monday (July 30)

  • All Day – German Preliminary CPI. Estimate 0.4%

Tuesday (July 31)

  • 2:00 German Retail Sales. Estimate 1.1%
  • 3:55 German Unemployment Change. Estimate -10K
  • 5:00 Eurozone CPI Flash Estimate. Estimate 2.0%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%
  • 5:00 Eurozone Preliminary Flash GDP. Estimate 0.4%
  • 5:00 Eurozone Unemployment Rate. Estimate 8.3%

*All release times are DST

*Key events are in bold

DAX, Monday, July 30 at 7:10 DST

Previous Close: 12,860 Open: 12,820 Low: 12,814 High: 12,849 Close: 12,845

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The DAX index is slightly higher in the Friday session, continuing the upward trend seen on Thursday. Currently, the DAX is at 12,844, up 0.27% on the day. On the release front, the sole event is German Import Prices. The indicator dropped 0.5% in June, down sharply from the 1.6% gain a month earlier. Still, this beat the estimate of 0.5%. The U.S will release Advance GDP for Q2, with the markets expecting a strong gain of 4.2%.

It was more of the same from the ECB, which maintained its monetary policy at its Thursday policy meeting. The main refinancing rate remained at 0.0%, where it has been pegged since January 2016. In a policy statement, policymakers reiterated that rates would remain at current levels “through the summer of 2019”, and “as long as necessary to boost inflation to the target of just under 2.0%. There has been some quibbling among analysts as to the exact meaning of “through the summer”, but what is clear is that the ECB plans to keep rates at a flat 0.00% after winding up its bond-purchase scheme at the end of the year. Low interest rates are bullish for stocks, and the DAX responded with gains on Thursday after the ECB statement. Still, a rate hike seems likely sometime in 2019. The exact timing of a rate increase will depend on the strength of the eurozone economy and inflation levels – if the second half of 2018 is marked by stronger growth and higher inflation, there will be pressure on the ECB to raise rates earlier rather than later in 2019.

It’s been an excellent week for the DAX, which has climbed 2.6% and is at its highest level since mid-June. Market sentiment improved on Thursday on Wednesday, after a meeting between EU Commission President Jean-Claude Juckner met with President Trump went better than expected. The two leaders agreed to take concrete steps to eliminate tariffs and improve the trade relationship between the U.S and the EU, which has been battered in recent weeks. President Trump agreed to hold back on any further tariffs while talks are ongoing. This is a major concession from Trump, who just last week had threatened to impose tariffs on European car imports. U.S tariffs on European aluminum and steel will remain in place, but Juckner pointed out that the U.S has agreed to reassess these measures. The surprise agreement triggered strong gains in bank and automakers shares on the DAX, boosting the index. With fears of a full-blown transatlantic trade war easing, the markets are hoping that the conciliatory tone shown by the Trump administration with the Europeans will extend to China as well.

  Yen buoyed as inflation tops estimates

Economic Calendar

Friday (July 27)

  • 2:00 German Import Prices. Estimate 0.3%. Actual 0.5%
  • 8:30 US Advance GDP. Estimate 4.2%

*All release times are DST

*Key events are in bold

DAX, Friday, July 27 at 5:10 DST

Previous Close: 12,809 Open: 12,823 Low: 12,816 High: 12,855 Close: 12,844

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The DAX index has posted strong gains in the Thursday session. Currently, the DAX is at 12,722, up 1.12% on the day. On the release front, German GfK Consumer Climate edged lower to 10.6, just shy of the estimate of 10.7 points. Later in the day, the ECB sets its minimum bid rate, followed by a rate conference with ECB President Mario Draghi.

Trade tensions between the U.S and the European Union have cast a pall over relations between the sides, so the success of EU Commission President Jean-Claude Juckner’s visit to the White House was welcome news. The parties announced on Wednesday that they had agreed to hold off on any further tariffs while talks are ongoing. This is a major concession from Trump, who had threatened to impose tariffs on European car imports. U.S tariffs on European aluminum and steel will remain in place, but Juckner pointed out that the U.S has agreed to reassess these measures. The news boosted the DAX index, as automaker shares have jumped. BMW has climbed 3.20%, Daimler is up 2.80% and Volkswagen has risen 3.53%. Bank shares are also higher, with Commerzbank up 1.46% and Deutsche Bank up 1.73%.

The markets are not expecting anything dramatic from ECB policymakers, with interest rates expected to remain at 0.00%. In June, the ECB decided to end its massive bond-purchase scheme by the end of the year, which has amounted to some 2.6 trillion euros. However, the ECB is playing it very cautious regarding any interest rate hikes, with the ECB saying it would maintain record-low rates “through the summer” of 2019. Trade tensions between the EU and U.S have dampened growth forecasts for the eurozone, although the Juckner-Trump meeting has considerably improved market sentiment. The ECB could tweak its guidance but is unlikely to make any changes to current monetary policy.

  Risk on as US and Europe avert trade battle

  U.S-E.U calls a ceasefire in the trade war

Economic Calendar

Thursday (July 26)

  • 2:00 German GfK Consumer Climate. Estimate 10.7. Actual 10.6
  • 7:45 ECB Main Refinancing Rate. Estimate 0.00%
  • 8:30 ECB Press Conference

*All release times are DST

*Key events are in bold

DAX, Thursday, July 26 at 7:25 DST

Previous Close: 12,579 Open: 12,705 Low: 12,696 High: 12,778 Close: 12,722

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The DAX index has lost ground in the Wednesday session. Currently, the DAX is at 12,627, down 0.50% on the day. On the release front, German Ifo Business Climate ticked lower to 101.7, just above the estimate of 101.6 points. On Thursday, Germany releases GfK Consumer Climate and the ECB will set its minimum bid rate.

Tit-for-tat tariffs between the U.S and the EU has seen the trade relationship between them reach a low point. More tariffs could be coming, as the EU has vowed to impose $20 billion in tariffs on U.S products if the Trump administration slaps $50 billion on European goods. Will the nasty trade war worsen or will the sides pull back? There could be important developments on Wednesday, as an EU delegation led by European Commission President John-Claude Juckner meets with President Trump at the White House on Wednesday. If the sides can make progress on car tariffs, automaker shares could jump and boost the DAX.

With the global tariff war threatening to hurt German and eurozone exports, investors have been keeping a close eye on manufacturing data. There was positive news on Tuesday, as Eurozone and German manufacturing PMIs continue to point to expansion. The German release improved to 57.3, easily beating the estimate of 55.5, while the eurozone reading of 55.1 was above the forecast of 54.7. Both indicators had dropped over six consecutive months and the July releases put an end to that nasty streak.  Services PMIs were not as strong, as the German and eurozone releases missed their estimates.

  Aussie falters as CPI misses estimate

  Trump and Juncker to set the dollar’s tone

  Juncker/Trump Meeting Eyed as Tariffs Hit Outlook

Economic Calendar

Wednesday (July 25)

  • 4:00 German Ifo Business Climate. Estimate 101.6. Actual 101.7
  • 4:00 Eurozone Money Supply. Estimate 4.0%. Actual 4.4%
  • 4:00 Eurozone Private Loans. Estimate 3.0%. Actual 2.9%

Thursday (July 26)

  • 2:00 German GfK Consumer Climate. Estimate 10.7
  • 7:45 ECB Main Refinancing Rate. Estimate 0.00%
  • 8:30 ECB Press Conference

*All release times are DST

*Key events are in bold

DAX, Wednesday, July 25 at 6:55 DST

Previous Close: 12,689 Open: 12,678 Low: 12,623 High: 12,693 Close: 12,627

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The DAX index has posted sharp gains in the Tuesday session. Currently, the DAX is at 12,715, up 1.33% on the day. On the release front, German and Eurozone manufacturing PMIs beat expectations, but services PMIs missed their forecasts. On Wednesday, German Ifo Business Climate is expected to dip to 101.6 points.

The EU and U.S have slapped tariffs on each other and a recent NATO summit exposed the frosty relations between President Trump and EU leaders. Still, there could be better news ahead, as EU President Jean-Paul Juckner meets with President Trump on Wednesday. If the talks show some progress, European equity markets could continue to move upwards. The DAX is up sharply on Tuesday, boosted by bank and automaker shares. Commerzbank has jumped 3.20%, Daimler is up 2.57%, BMW has climbed 2.07% and Volkswagen has risen 3.26%.

Eurozone and German manufacturing PMIs continue to point to expansion. The German release improved to 57.3, easily beating the estimate of 55.5, while the eurozone reading of 55.1 was above the forecast of 54.7. Both indicators had dropped over six consecutive months and the July releases put an end to that nasty streak. With the tariff war threatening to hurt German and eurozone exports, investors have been keeping a close eye on manufacturing data. Services PMIs were not as strong, as the German and eurozone releases missed their estimates.

  Commodities Weekly: Copper hovers near one-year low on global growth uncertainty

  U.S dollar boosted by higher Treasury yields

Economic Calendar

Tuesday (July 24)

  • 3:30 German Flash Manufacturing PMI. Estimate 55.5. Actual 57.3
  • 3:30 German Flash Services PMI. Estimate 54.6. Actual 54.4
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 54.7. Actual 55.1
  • 4:00 Eurozone Flash Services PMI. Estimate 55.0. Actual 54.4

Wednesday (July 25)

  • 4:00 German Ifo Business Climate. Estimate 101.6

*All release times are DST

*Key events are in bold

DAX, Tuesday, July 25 at 6:55 DST

Previous Close: 12,548 Open: 12,601 Low: 12,583 High: 12,746 Close: 12,715

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The DAX index has posted losses in the Monday session. Currently, the DAX is at 12,510, down 0.41% on the day. On the release front, there are no key German or eurozone indicators. Eurozone Consumer Confidence, which hasn’t posted gains since January, is expected to dip to -1 point. On Tuesday, Germany and the eurozone will release service and manufacturing PMIs.

President Trump made waves on Friday, after attacking the Federal Reserve’s monetary policy and also taking shots at the EU. Trump criticized the EU and China for manipulating their currencies and keeping interest rates lower. The escalating trade war, which started with Trump slapping tariffs on China, the EU and other trading partners, has weighed on global equity markets. Investors now have a new concern, which is that Trump could once again show that he is not afraid to lock horns with the EU and China, and the result could be a global currency war.

Investors are keeping a close eye on the June service manufacturing PMIs for Germany and the eurozone, which will be released on Tuesday. The manufacturing PMIs have weakened for six straight months – will this continue in June? Although the PMIs continue to show expansion in Germany and the eurozone, the markets remain nervous that the escalating trade war is having a negative impact on the manufacturing sector. If the readings continue to head lower on Tuesday, European equity markets could respond with losses.

After years of monetary stimulus to boost the eurozone economy, the ECB is close to phasing out its asset-purchase program. The ECB plans to trim its monthly purchases from EUR 30 billion to 15 billion in September and wind up the program in December. Is a rate hike next on the menu? Any clues of a change in monetary policy are bound to affect the euro, as the ECB has not raised rates since 2011. Many analysts are predicting a rate hike in the second half of 2019. However, growing global trade tensions could put a wrinkle in plans to raise rates. The European Commission and the International Monetary Fund have lowered 2018 growth forecasts for the eurozone and for Germany. If the tariff slugfest continues, the markets could lose ground.

  Dollar weaker at the start of the week as G-20 comments on trade wars

Economic Calendar

Monday (July 23)

  • 6:00 German Buba Monthly Report
  • 10:00 Eurozone Consumer Confidence. Estimate -1

Tuesday (July 24)

  • 3:30 German Flash Manufacturing PMI. Estimate 55.5
  • 3:30 German Flash Services PMI. Estimate 54.6
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 54.7
  • 4:00 Eurozone Flash Services PMI. Estimate 55.0

*All release times are DST

*Key events are in bold

DAX, Friday, July 23 at 6:50 DST

Previous Close: 12,561 Open: 12,519 Low: 12,488 High: 12,564 Close: 12,510

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The DAX index is almost unchanged in the Friday session. Currently, the DAX is at 12,679, down 0.06% on the day. On the release front, German PPI dipped to 0.3%, matching the estimate. The eurozone current account surplus dropped sharply to 22.4 billion. This was well short of the forecast of 27.2 billion and the lowest surplus since June 2017.

After years of monetary stimulus to boost the eurozone economy, the ECB is close to phasing out its asset-purchase program. The ECB plans to trim its monthly purchases from EUR 30 billion to 15 billion in September and wind up the program in December. Is a rate hike next on the menu? Any clues of a change in monetary policy are bound to affect the euro, as the ECB has not raised rates since 2011. Many analysts are predicting a rate hike in the second half of 2019. However, growing global trade tensions could put a wrinkle in plans to raise rates. The European Commission and the International Monetary Fund have lowered 2018 growth forecasts for the eurozone and for Germany. If the tariff slugfest continues, the euro will likely continue to lose ground.

The eurozone economy is in good shape and stronger growth has resulted in higher inflation levels. In June, euorozone CPI improved to 2.0%, reaching this symbolic level for the first time since February 2017. On an annualized basis, Final CPI also came in at 2.0%. If inflation levels continue to rise, there will be pressure on the ECB to consider raising interest rates, although this is an unlikely scenario before next year. The DAX has enjoyed a strong July, posting gains of 4.3%.

  Yuan’s fall extends to a fourth straight day

Economic Calendar

Friday (July 20)

  • 2:00 German PPI. Estimate 0.3%. Actual 0.3%
  • 4:00 Eurozone Current Account. Estimate 27.2B. Actual 22.4B

*All release times are DST

*Key events are in bold

DAX, Friday, July 20 at 5:10 DST

Previous Close: 12,686 Open: 12,662 Low: 12,638 High: 12,697 Close: 12,685

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The DAX index has posted losses in the Thursday session. Currently, the DAX is at 12,715 down 0.39% on the day. Still, the DAX is in green territory this week, with gains of 1.4 percent. On the release front, there are no major German or eurozone events. On Friday, German PPI is expected to dip to 0.3% and the eurozone current account surplus is forecast to narrow to EUR 27.2 billion.

Eurozone inflation continues to move upwards and reached a milestone in June, with a gain of 2.0%. This was the first time inflation hit the 2.0% threshold since February 2017. On an annualized basis, Final CPI also came in at 2.0%. The ECB has said it will taper its monthly bond purchases to EUR 15 billion in September and wind up the program completely in December. With this stimulus program on its last legs, attention has focused on whether the ECB will raise interest rates. A rate hike would likely have a significant impact on the markets, as the ECB last raised rates back in 2011. If inflation levels continue to rise, there will be more pressure on the ECB to consider a rate hike sooner rather than later.

Fed Reserve Chair Jerome Powell reaffirmed his positive outlook on the U.S economy in testimony before the Senate Banking Committee earlier this week. Powell said that he expected the labor market to remain tight and inflation to stay close to the Fed’s target of 2 percent for the next several years. Powell added that the Fed would continue to gradually raise interest rates. Lawmakers appeared satisfied with current monetary policy, but Powell did face some pointed questions regarding the escalating trade war, which has raised concerns that economy could take a downturn if the tariff battles continue.

Economic Calendar

Thursday (July 19)

  • There are no German or eurozone events

Friday (July 20)

  • 2:00 German PPI. Estimate 0.3%
  • 4:00 Eurozone Current Account. Estimate 27.2B

*All release times are DST

*Key events are in bold

DAX, Thursday, July 19 at 6:45 DST

Previous Close: 12,765 Open: 12,740 Low: 12,693 High: 12,758 Close: 12,715

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The DAX index has posted considerable gains in the Wednesday session. Currently, the DAX is at 12,750 up 0.71% on the day. On the release front, there are no major German or eurozone events.

A milestone was reached on Thursday, as Eurozone Final CPI reached the 2.0% threshold in the June release. On an annualized basis, Final CPI also came in at 2.0%. This marks the highest level since February 2017. As the ECB prepares to wind up its asset-purchase program, the markets are looking for clues about a possible rate hike. Such a move would likely have a significant impact on the markets, as the ECB last raised rates back in 2011. If inflation levels continue to rise, there will be more pressure on the ECB to consider a rate hike sooner rather than later.

With global protectionist winds getting stronger by the week, Japan and the EU signed a free trade agreement on Tuesday. At the signing ceremony, Prime Minister Shinzo Abe and European Council head Donald Tusk said that the deal is a response to growing concerns about protectionism. The agreement will eliminate most tariffs between the EU and Japan, and will be particularly beneficial for Japanese car makers and European food producers. No less important, the agreement marks the largest free trade agreement in the world, as the EU and Japan cover about one-third of global GDP and some 600 million people.

Economic Calendar

Wednesday (July 18)

  • 5:00 Eurozone Final CPI. Estimate 2.0%
  • 5:00 Eurozone Final Core CPI. Estimate 1.0%
  • Tentative – German 30-year Bond Auction

*All release times are DST

*Key events are in bold

DAX, Monday, July 18 at 7:05 DST

Previous Close: 12,661 Open: 12,725 Low: 12,713 High: 12,779 Close: 12,745

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