The DAX index has a middling day on Friday as it continued to do what it has been doing over the past few weeks, which is to consolidate and range between the 12000 and 12350 regions. This has been the pattern of ranging that we have witnessed over the last few weeks except for an odd situation like when the risks rise and the markets all around the world respond by dropping lower and the DAX follows suit.
DAX Likely to Open Higher
There is more reason for the index to be consolidating now as we approach the elections in Germany. The existing President Merkel has been in control for a decade now and she is expected to win the elections easily but the markets and the traders have had such experiences before and they do not want to commit too much on either side at this point of time. The elections are scheduled to be held later this month and that is why we have been saying that the consolidation and ranging is likely to continue atleast till that time.
Draghi has also said that he would be considering the length and the breadth of QE and its tapering at appropriate points of time which could also mean that the tapering could begin soon but might not lead to full removal of QE anytime soon. This has also been weighing on the European stock markets over the last couple of weeks, despite the improving data from the Eurozone and from Germany in specific.
Looking ahead to the rest of the day, there is not much news from Germany for today but we might see the DAX open with a gap up for the day as the lack of additional tension from the Korean region over the weekend would be a relief for the traders and the markets and this is likely to boost the stock markets around the world for the short term. It remains to be seen whether the DAX index would be able to hold on to its opening gains.
This article was originally posted on FX Empire
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
