DAX Index Ignores Softer NFP Report, Bullish Rectangle Pattern in Play
Dax 30 traders ignored the December Non-Farmpayrolls, NFP, and 1.5 hours after the release of the labor market report; the DAX index was up by 0.27% from the low reached on the initial reaction to the NFP report.
The US economy created 145,000 new jobs vs. the 164,000 projected, yet the important, US Unemployment rate, stayed unaltered at 3.5%, the lower level since 1969. Annual wage growth was also lower than expected and increased with a pace of 2.9%, lower than the 3.1% anticipated.
The US Dollar took a bit of a hit on the weaker than expected NFP report. However, stock markets ignored the news. One reason could be that stock markets traders want a healthy US economy, with moderate inflation, and that is what the December report is showing. The significant unemployment rate remained low, and at the same time wage growth is no too high. If it was, it could force the Federal Reserve to act, and this could put the breaks on the US economy if they did, sending the DAX index lower.
At the time of writing, the rates markets were projecting that the Federal Reserve would leave rates at the current level of 150-175 or be higher, with a 79.4% probability at the June 10 FOMC rate meeting.
Yesterday, the DAX index breached the January 9 high of 13462.2, and that trigged a breakout from a rectangle pattern with a price objective of 14060. The pattern will remain in place as long as the price trades above the January 6 low of 12949.3, and I anticipate that traders will be buying dips in the index.