German investor confidence low, again
While the market is mainly focused on the upcoming ECB meeting on Thursday, today saw the release of important macroeconomic data for both Germany and the Eurozone as a whole.
According to the Eurozone’s preliminary GDP data, during the second quarter the economy grew more than expected, with GDP increasing by 2.2% - as opposed to the 2% anticipated. Year-on-year GDP growth came in at 14.3% versus the 13.6% expected.
In Germany, the industrial production and confidence data has been published by the German ZEW. The only positive data in the report is related to industrial production in July, which increased by 1% against the 0.9% expected.
Despite this, the data that interests us the most, and that could have the greatest impact in the future, is the data related to investor confidence. For the fourth consecutive month, German investor confidence is not only lower than the previous month's figure, but also worse than expected by the analysts' consensus.
The ZEW current sentiment index was also negative for the second month in a row. So, although the overall trend remains positive, as we have highlighted in previous analyses, the German economy is showing signs of slowing down.
This data shows, once again, that confidence in the future of the economy is deteriorating. The economy is currently being maintained by the measures implemented by central banks, so a possible start to tapering in the US or Europe could cause problems for financial markets and the recovery. Therefore, we will have to keep an eye on the outcome of the ECB meeting on Thursday, although for the moment it is not expected to take action and once again follow the Fed's lead.
If we focus on the German DAX30, we can see that, during the last few months, it has maintained a clear upward trend that led it to set new historical highs in mid-August. These highs were set after the price overcame the sideways movement it had been following since June, after twice breaking above the uptrend line as we can see in the areas marked by the circles on the daily chart below.
Currently, we can observe that the DAX30 is undergoing a triangular consolidation formation - in which the price is fighting to maintain its 18-session moving average in white and its support/resistance level represented by the orange band, after losing its long-term uptrend line.
The definitive loss of these supports could possibly open the door to a larger pullback that could target the lows of the sideways range in the red band - which we can see in the H4 chart below.
Alternatively, if the price manages not only to hold these supports, but also to break this triangular formation to the upside, we could see a new bullish surge that could set new all-time highs.
Evolution of the last five years:
- 2020: 3.6%
- 2019: 25.48%
- 2018: -18.26%
- 2017: 12.51%
- 2016: 6.87%
With our Premium Analytics portal, traders can find the latest market news, sentiment and technical insight in one easily accessible location!
Furthermore, with a Trade.MT5 account from Admirals, you can trade Contracts For Difference (CFDs) on the DAX30, IBEX35, SP500 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 to open an account today:
INFORMATION ABOUT ANALYTICAL MATERIALS:
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 Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- 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.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst Roberto Rojas, Freelance Contributor (hereinafter "Author") based on personal estimations.
- 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, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- 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 Admiral Markets 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.
- 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.
