DAX climbs as investors hopeful for ECB stimulus

The DAX has resumed its upward movement on Thursday. Currently, the index is at 12,007, up 0.22% on the day. In economic news, German Factory Orders slowed to 0.3%, above the estimate of 0.1%. Eurozone GDP improved to 0.4%, matching the estimate. Later in the day, the ECB releases its key interest rate, which is expected to remain at a flat 0.00%.

The ECB winds up its monthly policy meeting on Wednesday. With policymakers expected to hold rates at 0.00%, investors will be focused on the policy statement, and follow-up comments from Mario Draghi. Traders should be prepared for a dovish stance at Draghi’s post-meeting press conference. Will the ECB inject some stimulus measures to boost eurozone inflation? Mario may announce that the ECB will pay banks to borrow funds from the central bank, if the funds are passed on to consumers and small businesses. The ECB will also provide new outlooks for inflation and growth. In March, the ECB forecast GDP at 1.1% and inflation at 1.2% in 2019. Will the bank revise the upcoming forecast upwards? If so, investors could respond with a thumbs-up and drive the euro higher.

The DAX continues to show significant volatility. The index sustained two weeks of sharp drops, but has rebounded nicely this week, gaining 2.4%. With the ECB rate decision later in the day and the U.S. releasing nonfarm payrolls on Friday, traders can expect more movement from the DAX before the week is out.

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Economic Calendar

Thursday (June 6)

• 2:00 German Factory Orders. Estimate 0.1%

• 5:00 Eurozone Revised GDP. Estimate 0.4%

• 7:45 ECB Monetary Policy Statement. Estimate 0.00%

• 8:30 ECB Press Conference

Previous Close: 11,971 Open: 11,971 Low: 11,950 High: 12,058 Close: 12,007