The DAX index has jumped in the Wednesday session. Currently, the DAX is trading at 11,606, up 1.07% on the day. On the release front, German industrial production posted a gain of 0.2%, above the estimate of 0.0%. Eurozone retail sales improved to 0.0%, shy of the estimate of 0.1%. On Thursday, Germany releases trade balance and the eurozone publishes its economic forecasts.
European markets have posted gains on Wednesday, as investors expressed relief that the mid-term election uncertainty is over and the slugfest ended up as a split-decision. Had the Democrats taken back both houses of Congress, Trump would have been a lame duck for the next two years, and he would have had great difficulty passing any further market-friendly reforms. After a rough October for the DAX, investors are hoping that the positive start to November continues.
All eyes were on the U.S mid-term elections, and when the dust settled, both parties could claim a victory of sorts. The Democrats regained control of the House of Representatives for the first time since 2010, but the Republicans maintained control of the Senate, and have increased their majority. The results are a setback for President Trump, as the Democrats will be in a stronger position to derail Trump’s plans to boost fiscal stimulus and lower taxes. Investors have reacted on Wednesday by sending the dollar lower. Investors will be shifting focus to the Federal Reserve, which releases its monthly rate statement on Thursday. The Fed is expected to maintain the benchmark rate at a range of between 2.0% and 2.25%. A hawkish rate statement could boost global equity markets.
Commodities Weekly: Oil near 7-month lows on Iran waivers
Investors relieved as blue wave falls short
Economic Calendar
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2:00 German Factory Orders. Estimate -0.4%. Actual 0.3%
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3:55 German Final Services PMI. Estimate 53.6. Actual 54.7
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4:00 Eurozone Final Services PMI. Estimate 53.3. Actual 53.7
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5:00 Eurozone PPI. Estimate 0.4%. Actual 0.5%
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All Day – US Congressional Elections
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2:00 German Industrial Production. Estimate -0.1%
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5:00 Eurozone Retail Sales. Estimate 0.1%
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Tentative – German 10-year Bond Auction
Open: 11,484 Low: 11,515 High: 11,636 Close: 11,606
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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