DAX loses ground on soft German manufacturing report
|The DAX index has retracted in the Wednesday session, after sharp gains on Tuesday. The DAX is currently trading at 11,309, down 0.50%. On the release front, German Factory Orders declined 1.6%, compared to an estimate of a 0.3% gain. On Thursday, Germany releases industrial production and the EU publishes its economic forecasts.
Investors remain concerned about the strength of the eurozone economy, as the locomotive of the eurozone has been struggling. Retail sales ended the year on a low, as the December score plummeted 4.3% last week, its sharpest decline in more than 12 years. On the manufacturing front, German manufacturing PMI for January dipped to 49.7, below the 50-point level which separates contraction and expansion. This was the weakest score since October 2014. The dismal news continued on Wednesday, as factory orders fell 1.6%, after a decline of 1.0% in the previous release. Global trade tensions and weakness in the German auto sector continue to weigh on the manufacturing sector. Weakness in manufacturing can be seen across the eurozone, as France and Italy both posted manufacturing PMIs in contraction territory in January.
The eurozone may be experiencing a slowdown, but that hasn’t changed the ECB’s guidance on interest rates. The bank continues to forecast a rate hike in December, but this stance has become increasingly out of sync with market sentiment, which has ruled out a rate hike before mid-2020. With ECB President Mario Draghi due to leave the job in October, policymakers are reluctant to alter current guidance and ‘tie the hands’ of Draghi’s successor. This means that the ECB will cling to its guidance unless economic conditions significantly deteriorate.
Quiet midweek eyed ahead of May’s Brussels visit
Dollar drives higher
-
2:00 German Factory Orders. Estimate 0.3%. Actual -1.6%
-
2:00 German Industrial Production. Estimate 0.8%
-
4:00 ECB Economic Bulletin
-
5:00 EU Economic Forecasts
Previous Close: 11,176 Open: 11,183 Low: 11,176 High: 11,321 Close: 11,309
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.