The DAX corrected lower yesterday on the back of some mixed data from Germany and also on concerns over oil supply due to the crisis in Saudi Arabia and the continuing risks in the Korean region. This has to be viewed as a healthy correction which brought down the index from the highs of its range where it has been consolidating over the past few days and this consolidation with a bearish bias is likely to continue for the short term.
DAX Corrects on Weak Data
The manufacturing production data came in much below expectations which was a shock to the markets as this is a piece of data that has always been either according to expectations or beaten the expectations more often than not. This was something that the market did not expect and this was one of the major factors that led to the sell off in the DAX which pushed the index below the 13400 region.
The pressure on the DAX continued till the close of the market as the tension continues to prevail in the Korean region. Trump is on a visit to many Asian countries and the countries on his list include South Korea and Japan and it is likely that North Korea would plan on doing something to ruffle the feathers of the US while Trump is in that region. This has kept the uncertainty going and that has also weighed on the DAX yesterday. It is likely that the DAX will continue to be under pressure today also.
Looking ahead to the rest of the day, we do not have any major news from the Eurozone or Germany for the day and hence expect a slow opening to the DAX for today. The coalition talks in Germany are also progressing in a very slow manner and though there has not been any major roadblocks in the talks, the slow progress and the ensuing uncertainty also seems to be weighing on the DAX. We believe that the uptrend in the index is still intact which should carry the index further higher.
This article was originally posted on FX Empire
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