Article Hero

Negative macro-economic data in Germany – Market Overview

1611922434.png
Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Germany's economy falters, data showing GDP decrease

After a slight lightening in the markets, yesterday afternoon after some measures were taken to avoid excess volatility in some North American stocks that had experienced movements well above the usual as a result of actions promoted by associated retail traders on platforms like WallStreetbets; risk aversion is once again dominating the market.

Uncertainty remains due to the possibility that events like yesterdays will happen again. There are no regulatory means in the United States to avoid this, and traditional institutional investors are beginning to feel insecure about these events.

Added to all this are the economic figures that are not precisely positive at this epidemic stage.

Employment and GDP data in Europe

Germany, the leading country of the European Union, has had a fall in employment of 41k vs + 6k expected and a decrease in the interannual GDP of the fourth quarter of -2.9%, somewhat better than anticipated -3.4%, but a negative figure in any case.

Expectations for recovery are still weak as stated by the President of the ECB, Lagarde, especially with the latest data on the evolution of contagions from the pandemic that has led to a slowdown in economic activity as a result of mobility restriction measures.

The German DAX index remains under pressure in this scenario. In this case, the confrontation between the European Commission and the pharmaceutical company AstraZeneca is an instability factor. The possibility that the vaccine administration schedule may not be fulfilled as planned, with what this means a delay in the economy's opening.

The index is very close to the primary support located at 13424 points, whose break to the downside would mean the confirmation of the end of the last uptrend that began last November. The German index would head towards lower levels below this support in the 13140 points area where the 100-day SMA line passes, from a technical analysis perspective.

The Dollar strengthens again due to its status as a safe-haven currency and the maintenance of the yields of the US Treasury bonds, which in the case of the 10-year bond is at 1.06%.

EUR/USD falls back to the 1.2100 area and is approaching the main 1.2065 support area. Technically, a downward break from this level would trigger a reversal pattern whose theoretical target is around the 1.1850 levels, a critical price concentration zone, which would support the pair.

Sources: Bloomberg, Reuters.

This information prepared by capex.com/za is not an offer or a solicitation for the purpose of purchase or sale of any financial products referred to herein or to enter into any legal relations, nor an advice or a recommendation with respect to such financial products.This information is prepared for general circulation. It does not regard to the specific investment objectives, financial situation, or the particular needs of any recipient.You should independently evaluate each financial product and consider the suitability of such a financial product, by taking into account your specific investment objectives, financial situation, or particular needs, and by consulting an independent financial adviser as needed, before dealing in any financial products mentioned in this document.This information may not be published, circulated, reproduced, or distributed in whole or in part to any other person without the Company’s prior written consent.
Past performance is not always indicative of likely or future performance. Any views or opinions presented are solely those of the author and do not necessarily represent those of capex.com/zaJME Financial Services (Pty) Ltd trading as CAPEX.COM/ZA acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via CAPEX.COM/ZA, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15.  Magnasale Trading Ltd is the principal to the CFD purchased by investors.

Share this article

How did you find this article?

Awful
Ok
Great
Awesome

Read More

Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.