DAX – Steady Ahead of Trump Congress Address

The DAX Index has posted small losses in the Tuesday session. Currently, the DAX is trading at 11,816.00 points. On the release front, there are no major events in the eurozone. In the US, Preliminary GDP is expected at 2.1%. As well, President Donald Trump will address a joint session of Congress. On Wednesday, Germany releases three key events – Preliminary CPI, Unemployment Change and Final Manufacturing PMI.

Eurozone indicators started the week with mixed results. M3 Money Supply, which measures growth in the amount of money circulating in the eurozone, slowed to 4.8%, down from 5.0% a month earlier. This indicator is closely watched, as it often predicts economic activity. There was more positive news from bank lending to households, which improved for a third straight month, rising to 2.2% in January. Credit levels have been moving upwards since 2015, but have only recently shown strong gains. With inflation indicators also pointing upward, the ECB’s stimulus program could finally be producing results. The central bank last took action in December, when it extended its asset-purchase program for six months until December 2017, but reduced purchases from EUR 80 billion to 60 billion/mth. If Eurozone indicators continue to indicate modest growth, the ECB is unlikely to tinker with the asset-purchase program.

Investors across the globe will be watching closely, as President Trump delivers remarks to a joint session of Congress on Tuesday. Although it is not officially a State of the Union address, the speech could have significant ramifications for the financial markets. Since Trump’s election win, the stock markets are sharply higher and the US dollar has jumped 3.7% against the euro, but the greenback has lost ground since Trump has become president. It’s crunch time, as the markets want to hear some details about Trump’s economic agenda. Trump recently promised to unveil a “phenomenal” tax reform package and significant spending on infrastructure, but hasn’t provided any details. Tuesday’s speech marks a critical opportunity for the new administration, which is still trying to find its bearings after a rocky first month. If Trump fails to present specifics in terms of numbers or at least some timelines, market sentiment will likely sour and this could hurt the US dollar.

Economic Calendar

Tuesday (February 28)

• 2:45 French Consumer Spending. Estimate 0.6%. Actual 0.6%
• 2:45 French Preliminary CPI. Estimate 0.4%. Actual 0.1%
• 2:45 French Preliminary GDP. Estimate 0.4%. Actual 0.4%
• 5:00 Italian Preliminary CPI. Estimate 0.1%
• 8:30 US Preliminary GDP. Estimate 2.1%
• 21:00 President Trump Speech

Upcoming Key Events

Wednesday (March 1)

• All Day – German Preliminary CPI. Estimate 0.6%
• 3:55 German Unemployment Change. Estimate -10K
• 3:55  German Final Manufacturing PMI. Estimate 57.0
• 4:00 Eurozone Final Manufacturing PMI. Estimate 55.5

*All release times are EST

*Key events are in bold

DAX for Tuesday, February 28, 2017

DAX, February 28 at 5:35 EST

Open: 11,843.50 High: 11,848.50 Low: 11,795.50 Close: 11,817.50

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