Germany's industrial production index drops sharply

October 07, 2021 12:02

Whilst the market waits for the important release of the NFP and unemployment rate from the US tomorrow, we continue to see macroeconomic data from Germany that is not positive.  

Over the past few months, we have witnessed a deterioration in macroeconomic data globally - including from the US, China and Germany. Germany is the engine of the Eurozone; thus, its economic situation affects the economies of the rest of Europe. It is, therefore, very important to always keep an eye on the macroeconomic data from this European power.  

Last week, we saw that both the unemployment rate and the preliminary PMI data in Germany were worse than expected by the market consensus. Whilst the PMI of the services sector has been reported slightly better than the preliminary data, it is still much lower than the previous month's data.  

During yesterday's session we learned that German factory orders fell by 7.7% when they were expected to fall by 2.1%. This is not only worse than expected, but it has also pushed this indicator into negative territory from the previous month's positive figure of 4.9%.  

In addition, today we have learnt that the industrial production index has also gone from growing by 1.3% to losing 4%, also exceeding market expectations which had expected a reduction of just 0.4%.  

All this macroeconomic data continues to show weakness in future expectations and these may be even further negatively affected due to the energy crisis, which looks set to harden as winter approaches in Europe. This crisis is possibly the black swan that the markets have been expecting with sharp rises in energy prices.  

If we focus on the DAX40, we can see that, with the increase in volatility reflected in the ATR indicator, currently the price is once again at its important support level represented by the red band and the 200-session moving average.  

Depicted: Admirals MetaTrader 5 – DAX40 Daily Chart. Date Range: 27 August 2020 – 7 October 2021. Date Captured: 7 October 2021. Past performance is not a reliable indicator of future results. 


As we can see in the following chart, after making record highs the DAX40 started a correction that has led it not only to lose the long-term uptrend line, but also to lose several support levels causing a bearish crossover of both its MACD indicator and short and medium-term averages. The loss of this important support level could open the door to a possible trend reversal which could lead to a major reversal.  

Therefore, we will have to be very attentive to the evolution of the price in the coming sessions, given that if volatility continues to increase, the probabilities of breaking this level will increase.  

In contrast, if it finally manages to hold this important support level, we could find ourselves with a rebound in search of its 18-session moving average and the orange band that act as the main resistance for the moment. 

Depicted: Admirals MetaTrader 5 – DAX40 Daily Chart. Date Range: 27 August 2020 – 7 October 2021. Date Captured: 7 October 2021. Past performance is not a reliable indicator of future results. 


Evolution of the last five years: 

  • 2020: 3.6%
  • 2019: 25.48%
  • 2018: -18.26%
  • 2017: 12.51%
  • 2016: 6.87%

You can follow all the latest market news, sentiment and technical insight with our Premium Analytics tool! Click the banner below to find out more: 

Furthermore, with the Trade.MT5 account from Admirals, you can trade Contracts for Difference (CFDs) on the DAX40, IBEX35, FTSE100 and many other instruments! CFDs allow traders to attempt to profit from both rising and falling prices, whilst also benefiting from the use of leverage. Click the banner below in order to open an account today: 


The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:  

  1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  4. The Analysis is prepared by an independent analyst Roberto Rojas, Freelance Contributor (hereinafter "Author") based on personal estimations.
  5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  6. Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
Roberto Rojas
Roberto Rojas Financial Analyst, Admirals Spain

Roberto is a Financial Analyst with a European Financial Advisor certificate and a Double Degree in Business Administration and in Actuarial and Financial Sciences. In 2013 was graduated as an Expert Manager in Equities