DAX German GDP Contracts Unexpectedly, Index Remains Positive
German Flash GDP data for Q2 showed a decline QoQ of 0.1% when most analysts had forecast an increase of 0.1%.
Despite easing inflationary pressure, the German economy hasn’t managed to take off. GDP Flash data YoY also showed the economy is contracting by 0.1%, with most economists predicting zero growth.
Eyes turn to tomorrow’s inflation data for the Eurozone, with forecasts predicting a small decline from 2.9% to 2.8% YoY for Core Inflation. The data is priced into the market, but it will be necessary to see the confirmation to keep alive ECB sentiment of further rate cuts.
Today’s biggest gainers in the DAX index are:
- Deutsche Bank 1.61%
- Vonovia 1.59%
- Siemens Energy 1.46%
This is going to be a busy week with central bank policy meetings from the BoJ, Fed, and the BoE. Japan will announce an interest rate decision overnight, while the market expects the Fed to keep rates on hold again tomorrow.
The BoE will hold its monetary policy meeting on Thursday, and many analysts are calling the decision a very close one. Evidence the central bank is getting closer to cutting rates will come from the number of members voting in favor of easing.
At the previous meeting, 2 committee members voted to cut rates. The market will expect at least one more member to vote for easing to keep dovish hopes alive.
Technical View
The day chart for the DAX below shows a market that is in a narrowing range. The recent price range has been trapped between a previous all-time high of 18,601 (black line) and bottom of the Ichimoku cloud at 18,167.
The latest attempt to break into a bull trend, which lead to recent high of 18,785 (blue line) has given rise to a head-and-shoulders pattern (yellow line). The neckline (grey line) is still intact, and it would take a close below it to trigger a bearish signal.
Should the market break the neckline, the next support would be at 17,939 (green line), and further down at 17,419 (orange line). To the upside, the market will find resistance at 18,601 (black line), and 18,785 (blue line.
However, to consider a bull trend back in place we would need to see the market close above the all-time high of 18,913 (red line).
ABOUT THE AUTHOR
See More
Sidebar rates
Add 3442
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals