News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Wall Street
Mixed
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • The US Dollar, British Pound, and Euro will all be closely watching key geopolitical developments in North America (Powell testimony), the UK (Brexit talks) and Europe (EU summit). Get your market update from @ZabelinDimitri here:https://t.co/q4AJW6PTCu https://t.co/aAhCrBCBtX
  • Gold and silver are at risk of extending their slide from monthly highs as the lack of additional fiscal stimulus and rising geopolitical tensions underpin USD. Get your market update from @DanielGMoss here: https://t.co/sYF5pV9zrE https://t.co/04Czwv3PpW
  • #Nasdaq 100 Recovering? Biden-Trump #Election2020 Betting Spread Widens⬇️ https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/09/22/Nasdaq-100-Recovering-Biden-Trump-Election-Betting-Spread-Widens.html
  • Join @ddubrovskyFX 's #webinar at 8:00 PM ET/00:00 PM GMT to find out what information you can gain from knowing what other traders are buying or selling. Register here: https://t.co/Bb3CTCTm44 https://t.co/QaZzPd0K6D
  • The US Dollar is struggling against ASEAN currencies despite weakness in the S&P 500. Capital remains flowing into emerging markets, keeping USD under pressure, could this change? Find out from @ddubrovskyFX here:https://t.co/nwhy3XhE74 https://t.co/7nvijaAruu
  • Retail CFD traders have poked their head back into net bullish territory - an uncommon territory - in their net positioning for the $DJIA (Wall Street). Skeptical of a breakdown it seems https://www.dailyfx.com/sentiment?ref-author=Kicklighter&CHID=9&QPID=917719 https://t.co/g12EqBGkGh
  • The Nasdaq 100-tracking QQQ ETF saw more than -$3.4 billion leave its coffers on Friday. Get your #Nasdaq market update from @PeterHanksFX here: https://t.co/NZWg2XrEuD https://t.co/S9uxEGzJjJ
  • The $QQQ ETF recently saw its largest outflow, followed by its largest inflow since October 2000 What does this mean for the Nasdaq? Read more - https://www.dailyfx.com/forex/market_alert/2020/09/22/Nasdaq-100-Forecast-Exodus-from-Tech-ETF-Has-Worrisome-Historical-Parallel.html?ref-author=phanks&QPID=917701&CHID=9 https://t.co/bS0V5IsS6Z
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.05% 🇳🇿NZD: -0.49% 🇪🇺EUR: -0.55% 🇨🇭CHF: -0.58% 🇬🇧GBP: -0.62% 🇦🇺AUD: -0.74% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/2JBbEKosO9
  • South African Rand clawing back yesterday’s depreciation against the US Dollar. Get your $USDZAR market update from @WVenketas here: https://t.co/9XCvJgRisU https://t.co/qk5KR4DncU
Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

2020-08-24 07:00:00
Daniel Moss, Analyst
Share:

DAX 30 Index, German Bunds, Bundesrepublik Deutschland Finanzagentur – Talking Points:

  • Cooling US-China tensions soothed investors concerns during Asia-Pacific trade.
  • Rising Covid-19 case numbers in Germany may weigh on regional risk assets in the near-term.
  • DAX 30 stock index poised to move higher despite weakening fundamentals.

Asia-Pacific Recap

Asian equity markets rose during Asia-Pacific trade on the back of easing US-China tensions, as the Trump administration moved to reassure US firms that they can still do business on the Chinese mainland with the popular messaging app WeChat – owned by Tencent.

S&P 500 futures rose alongside the Australian ASX 200 and Japanese Nikkei 225 index whilst the haven-associated US Dollar and Japanese Yen slid against their major counterparts.

Gold drifted lower as US 10-year Treasury yields dipped back below 63 basis points.

Looking ahead, a relatively light economic docket may see investors begin to turn their focus to the upcoming Federal Reserve Economic Policy Symposium in Jackson Hole on August 27.

Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

Market reaction chart created using TradingView

German Covid-19 Case Surge Threatening DAX 30 Benchmark

The largest daily increase of Covid-19 cases in over 4-months is threatening to halt Germany’s nascent economic recovery, as the number of infections rose by 2034 on August 22, bringing the national total to 232,082. The number of fatalities increased by seven to bring the death toll to 9,267.

This recent surge may force Angela Merkel to reintroduce tighter restrictions, after the German Chancellor stated that “this is a trend that cannot continue and must be halted [as] at this point, there can be no further loosening of restrictions”.

Considering Europe’s largest economy weathered the initial phase of the virus better than a vast majority of its EU counterparts, a ‘second wave’ of coronavirus infections may take some of the shine off the German recovery and hamper the performance of regional risk assets in the near-term.

Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

Source – Worldometer

In fact, the impact of the recent climb in case numbers is immediately reflected in local mobility data, with all three metrics – walking, driving and transit – noticeably retreating from their respective post-crisis highs set earlier this month. These declines would likely intensify in the wake of tighter restrictions.

With that in mind, Germany’s upcoming second quarter GDP release may not be as influential on the near-term outlook for the benchmark DAX 30 index even if it exceeds expectations, given the deteriorating local health situation and the lagging nature of the economic indicator.

German Mobility Trends (YTD)

Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

Source – Apple Mobility Data

German Bond Issuance May Underpin Risk Assets

Counterbalancing the headwinds facing regional risk assets is the significant increase in long-dated security offerings by the German Treasury, set to double its weekly bond offering from last week to 9.5 billion.

This substantial increase in debt issuance may hamper the performance of ‘safe haven’ German Bunds and in turn direct capital flows into regional equity markets, given the negative correlation seen historically.

Of course, correlation does not imply causation. Nevertheless a significant sell-off in bond prices could potentially underpin the German DAX 30 and limit its potential downside despite a weakening fundamental backdrop.

Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

Source – Bundesrepublik Deutschland Finanzagentur

DAX 30 Daily Chart - 21-DMA Directing Price Higher

From a technical perspective, the German DAX 30 index continues to track within the confines of an Ascending Channel and remains constructively poised above the midpoint of the 2009 uptrend. This suggests that an extension of the rally from the monthly low could be on the cards.

Furthermore, the RSI appears to be climbing away from its neutral midpoint as the MACD indicator hovers comfortably in positive territory. This may be indicative of swelling bullish momentum.

Mobile support at the 21-day moving average (12750) could direct price towards resistance at the yearly open, with a daily close above the July high (13126) needed to carve a path back to the record high set in February (13829).

Conversely, a daily close below the trend-defining 50-DMA (12645) may encourage would-be sellers and potentially result in price sliding towards channel support, with the 200-DMA (12170) serving as the last line of defence for buyers.

Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

DAX 30 Index daily chart created using TradingView

Germany 30 MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -12% 31% 2%
Weekly 49% -30% 0%
What does it mean for price action?
Get My Guide

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

Building Confidence in Trading
Building Confidence in Trading
Recommended by Daniel Moss
Building Confidence in Trading
Get My Guide

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES