The DAX started the day off on a rough note, and for most of the day, the index stayed relatively flat, remaining in the red. That is, until just after mid-day when eurozone economic data was released. The data showed that the block of 19 European countries saw faster economic growth than the United States over the past quarter. Below, we’ll talk about the data that was released, why this data caused the DAX to find its way to the green, and what binary options traders should be watching for ahead.
European GDP Outpaces United States GDP
As mentioned above, the DAX had an incredible day in the market today, and for good reason. Economic data for the first quarter of 2017 was released, showing that the European economy is on pace to continue growth. In fact, the 19-country block saw an increase in GDP of 0.5%. That brings the European group of countries to an annualized growth rate of 1.8%. To put that number into perspective, the United States annualized growth rate for the same quarter came in at 0.7%. In fact, the US Federal Reserve has a goal of pushing United States growth to 2%, a figure that Europe is already very close to hitting.
This is incredibly positive news for the European economy. The fact that GDP is growing in the face of economic threats like the Brexit and ongoing geopolitical issues causing strain on the economy as a whole suggests that Europe’s path toward strong economic development is being paved. While we still don’t know, and will not know for a long time, what the outcome of the Brexit will be, one thing that we do know is that Europe is seeing positive movement.
Why This Is Sending The DAX Upward
At first glance, it may not seem like a birds eye economic overview of Europe as a whole would have much of an effect on the DAX. However, that notion couldn’t be further from the case. The reason is relatively simple. You see, the DAX is the benchmark stock market index of Germany. When we look at Europe, it’s clear that Germany is the economic powerhouse of the 19-member block of countries.
Because of Germany’s place within the eurozone, anything with regard to the European economy as a whole becomes incredibly important to Germany’s economy. With the DAX being the benchmark stock market index of Germany, anything having to do with the German economy will likely have an effect on the index. So, it’s no surprise that when economic data was released, showing that the European economy is on the path toward growth, the DAX found its way out of the red and into the green.
What Binary Options Traders Should Be Watching For Ahead
Moving forward, the DAX is going to see quite a bit of volatility. For binary options traders, another word for volatility is opportunity. If you want to take advantage of the opportunities ahead, it will be as simple as keeping an eye on the news. First and foremost, continue to watch economic data out of Europe. As you can see, a positive report on GDP, or really any major economic statistic, can take the DAX from the red to the green. Of course, negative reports will do the exact opposite. Also, it’s going to be important to continue watching the Brexit. At the end of the day, while media hype surrounding the topic has slowed quite a bit, the Brexit is still happening. Because nothing like this has ever happened before, no one quite knows what to expect. As a result, any updates surrounding the Brexit will likely lead to movement in the DAX.
What Do You Think?
Where do you think the DAX is headed moving forward? Join the discussion in the comments below!