The DAX index has posted considerable gains in the Wednesday session. Currently, the DAX is trading at 12,259, up 0.18% on the day. On the release front, there are no eurozone or German events on the schedule. On Friday, the focus will be on inflation indicators, with the release of the German Wholesale Price Index and the Eurozone Final CPI.
On Wednesday, ECB President Mario Draghi expressed cautious optimism that inflation levels are moving higher, but added that the bank still needed to see further evidence that this was indeed the case. Therefore, Draghi said that monetary policy would “remain patient, persistent and prudent”. With the eurozone economy showing its best numbers in a decade, there has been growing speculation that the ECB will wind up its stimulus program in September. However, inflation remains well below the ECB target of around 2 percent, so Draghi can afford to remain cautious and maintain current monetary policy.
German Chancellor Angela Merkel was elected to a fourth term on Wednesday, as Germany finally has a government in place, after an inconclusive election in September. However, Merkel will have her work cut out for her in what could be her last stint as leader of the eurozone’s largest economy. Merkel’s stature has diminished after a poor election, and she will preside over a fractured coalition. The vote in the German parliament was 364 to 315. Merkel was forced to give the SDP the finance and foreign ministry portfolios, so we can expect the new government to be more supportive of eurozone integration, including assistance for weaker eurozone members.
