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DAX Friday
DAX Friday

The DAX index opened lower for the day yesterday and spent the rest of the day in a consolidation and ranging mode as the market continues to wait for some important events over the weekend. It was the day after the FOMC, a day after the Fed had kept the door open for further rate hike in December and also sought to undertake balance sheet adjustment and this turned out to be mixed for the markets as the traders and investors could not make up their minds on whether it was good or bad for the US economy or anyone for that matter.

DAX Likely to be Weak

This uncertainty was clear in the price action that was seen in the index yesterday as the index traded with a 100 point range for much of the day. There is a lot to look forward to for the traders over the weekend and hence it was only natural that they did not want to stick their neck out at this point of time. Looking at the calendar, we can see that the elections in Germany are scheduled to be held over the weekend. These elections have not generated much media coverage as the elections here seem to be pretty much one-sided at this point of time.

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All opinion polls point to a victory for Merkel but as we have seen over the last couple of years, all around the world, each vote counts and nothing is sure until the results are announced. This is one of the reasons why we are seeing a lot of consolidation in the markets as the traders would like to see the results before committing their funds in a specific direction. Also, there is always the threat of North Korea launching a missile over the weekend and that has already been on the news today as there are reports that North Korea might blow up a hydrogen bomb.

Looking ahead to the day, we might see a slow opening to the DAX index which is likely to start on the backfoot due to the global risks around the news from the Korean region. We should expect the index to stay weak during the day as the traders take profits before the weekend.

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