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DAX Drops As German CPI Dips, ECB Meeting Next

The DAX index has lost ground in the Thursday session. Currently, the index is at 10,932, down 0.43% on the day. In economic news, investors are keeping a close eye on the ECB, which holds its policy meeting and is scheduled to wind up its stimulus program. German Final CPI dropped to 0.1%, matching the estimate. On Friday, Germany and the eurozone release manufacturing PMIs.

Last week was dismal for the equity markets, and the DAX lost plunged 6.4 percent. Risk apprehension has subsided this week, and the DAX has responded with gains of 2.1 percent. Although the U.S. and China remain embroiled in a nasty trade war, the markets moved higher after U.S. and Chinese trade negotiators spoke by telephone. China’s economy has been weakened by the trade war, raising hopes that the Chinese will be more flexible in trade talks with the United States. However, the arrest of a senior executive of a Chinese technology company in Vancouver and the angry Chinese response is the latest obstacle which could put a cloud over the talks. (if you want to make money in the financial market use our  forex robot)

After three years of stimulus, the ECB is expected to finally wind up the bank’s bond purchase program at the Thursday policy meeting. Through the program, the ECB purchased some 2.5 trillion euros in assets. The program was implemented in order to kick-start the economy and raise ultra-low inflation levels. Inflation has moved closer to the ECB target of around 2 percent, and the eurozone economy performed well earlier in the year. This prompted the ECB to announce that it would wind up the program in December. However, economic conditions have deteriorated in recent months, as the nagging U.S.-China trade war has weighed on the global economy and hurt the export and manufacturing sectors in Germany and the eurozone. Although the timing may not be ideal, the ECB is likely to stick with its pledge to wind up stimulus, since a change in stance would severely hurt its credibility. At the same time, the ECB is expected to fully reinvest the proceeds and maintain its bond holdings as long as is needed, in order to boost inflation. The ECB target of around 2 percent has remained elusive, and weak economic activity in the eurozone in the second half of the year is weighing on inflation levels. Read more forex news

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