Look ahead: US job openings, German unemployment
Corporate data has yet to hit the wires so the focus will be economic data, the first of which is German unemployment data. Interestingly, notes IGTV’s Jeremy Naylor, the dire data seems to be having little effect on the DAX.
(Partial Video Transcript)
DAX remains firm despite ailing economy
Welcome! Let's take a look at some of the events to watch out for on Wednesday 3 January 2024. It's the second trading day of the year and we are still suffering from light volumes and we'll see this in just a moment when we take a look at the German DAX.
I just want to quickly highlight what's happening, first of all, in Germany. We've got the unemployment rate; expectations are there for reading a 5.9%.
We know the German economy has suffered a little bit and it is suffering, but nonetheless the German DAX or the Germany 40, which is what it is called on the IG platform, is not showing much of the frailty of the economy.
DAX shrugs off recession concerns
Let's take a look at the chart here; it's certainly worth looking at this when considering where we potentially could go. It doesn't seem to be too worried about the fact that the German economy could be in recession; doesn't seem to be too worried about the fact that the data coming out of Germany is very weak.
Indeed in today's session you can see we've had a spike higher, not too far away from the record high at 17,004. In today's session, we went within a very short distance of the 17,000 level again but since then we've seen this pullback at 16,680. Are we now on a downward trajectory?
At the moment, not yet and I wouldn't be a seller of this market certainly until we pass below this line here, this low part of the candle here at 16,534 but even then I don't think it's a sell, I think it's just a question of retracing some of the big moves that we've seen.
This big blue box is the percentage move up that we've seen in 2023 of 20.6% and the German deck seems to be holding on despite the fact that we've got some poor economic data coming out of Germany which is expected to be underlined on this release of the unemployment number out first thing on Wednesday morning.
Forex investors await US jobs data
Then let's take a look as well at what's happening later on in the day because we start off on what is the big theme of the week for the foreign exchange markets and that is US jobs data.
In addition to the jobs opening we get on Wednesday, there's no ADP on Wednesday because it's a long weekend so that's been put back to Thursday.
On Wednesday we get the ISM manufacturing purchasing managers’ index (PMI) data, we get those job openings as well, an indication of the health of the economy and what employers are trying to do.
We also get the minutes of the last FOMC meeting and it's expected we'll see a continuation of the underlying the fact that we get this particular picture developing this year where we're going to get a drop in interest rates, it's just a question of when.
Will there be any more hints in the minutes of that last meeting? Possibly not but they are expected to underline the fact that interest rates are now due to come down, it's just a question of when and by what sort of degree.
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