DAX Hits The Year High Lifted By Corporate Earnings And Risk-On Sentiment

DAX spot index has entered a bull market since 12th July, the significant resistance level at 10473 was broken out on 8th August, spurred by the market’s risk-on sentiment resulting from central banks’ loose monetary policies. The DAX reached the intra-day high of 10701.38 points on Tue 9th Aug helped by the outperformance of reinsurer Munich Re and automobile sector, hitting the year’s highest level of 10740.31 on Thu 11th Aug. Be aware of a retracement at this price zone as the daily time frame KD indicator is around 90. The downside support line at 10630 is currently being tested again, with a confirmed break through, targeting the next support level at 10600 followed by 10500 and 10473.

The dollar index future has pulled back since 9th August, due to three reasons; the profit-taking pressure after Nonfarm Payrolls pushed the price up, the market’s lowered expectation for a Fed rate hike as economic data gave a mixed signal, and technically the KD indicator was at a high level, indicating a retracement. Keeping an eye on the Retail Sales, the Core Retail Sales, and the PPI figures, will be released on Friday 12th Aug. Positive readings will likely push the dollar up. Alternatively, negative figures will likely drive the dollar further down.

The weekly U.S. crude Oil Inventories released yesterday increasing by 1.055 million barrels which was worse-than-expected figure of -1.5 million barrels, the third straight rise. Oil prices have entered a bearish market since 10th July, the bearish momentum increased from 25th July onwards. WTI crude oil spot price plunged 23.78% from the year’s high at 52.02 on 8th June to 39.65 on 3th Aug, touching the significant support at 40 then rebounded, following by a pullback after testing the resistance zone between 43.50 to 44 three times. The bearish trend is still on going, in addition, the dollar index shows a rebound, diving the oil prices down. The significant support level at 40 will likely be test again.

A series of Eurozone economic data will also be released on Friday 12th August, including the second estimate of German Q2 GDP (YoY and QoQ) and CPI in July (YoY and MoM), the Italian Q2 GDP (YoY and QoQ), and the Eurozone Q2 GDP (YoY and QoQ).