Dax Rallies As Middle East Tensions Ebb

Dax has started Tuesday on firmer footing as sentiment improved surrounding the US – Iran flare up. Even though Iran continue to threaten revenge for the death of a top Iranian general on the orders of Trump, markets are defiantly attempting to shrug off those fears.

Demand for riskier assets such as equities are on the rise, whilst the safe haven trade is starting to look tired.

Data from German has been encouraging so far this week.

German retail sales smashed analysts’ expectations jumping 2.1% mom in November, significantly up from October’s -1.6% decline.
German service sector pmi also surprised to the upside calming fears of the ongoing manufacturing slump spilling over into the consumer sector.
Today HIS/Markit data showed that the German construction sector expanded at the fastest pace in 9 months.

There are certainly tentative signs that the slowdown in Germany is starting to bottom out. With the phase one trade deal expected to be signed between the US and China next week, there is also growing optimum that the German manufacturing sector, which is deep in contraction, could also be on the brink of turning a corner.

Euro weakness supports Dax
Despite the stronger data from Germany, Eurozone inflation ticking higher to 1.3% and eurozone retail sales increasing 2.2%, the euro remains on the back foot and below $1.12. The weaker euro is also offering support to the multinational exporters on the Dax.

Levels to watch:
The Dax jumped on the open and is trading 0.7% higher. The surge in the Dax has pushed it back above its 50 sma, giving the bulls the upper hand. Immediate resistance can be seen at 13280. A breakthrough here could open the doors to 13425 (2019 high).
On the downside support can be seen at 31188 and the 50 sma at 13157. A breakthrough these levels could see the Dax drop to 12884.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.