DAX Dips as Eurozone Final CPI Edges Lower

The DAX has posted losses in the Wednesday session. Currently, the index is trading at 13,217.50, down 0.22% from the Tuesday close. On the release front, Eurozone Final CPI edged lower to 1.4%, matching the forecast. Eurozone Final Core CPI came in at 0.9%, as expected. On Thursday, Bundesbank President Jens Weidmann will speak at an event hosted by the Bundesbank and the IMF.

European stock markets are in red territory on Wednesday, taking their cues from the Asian markets. As well, there is little support from the euro, which has posted declines on the day. After a tremendous start to the year for equity markets, traders have taken a pause, perhaps questioning the fast jump out of the gates in the first half of January. Still, the markets seem well positioned to continue the rally. The eurozone economy enjoyed a strong 2018, and growth should continue in early 2018. There has been positive developments on the political front in Germany, as Angela Merkel’s conservatives and the Social Democrats have signed a coalition blueprint, raising hopes that coalition talks will bear fruit.

The DAX has received a boost on speculation that the ECB could wind up its stimulus later in the year, and perhaps even raise interest rates. Is the market getting a bit ahead of itself? On Tuesday, Bundesbank President Jens Weidmann said in a newspaper interview that he did not expect interest rates to rise until mid-2019, even if QE ends in late 2018. If Weidmann reiterates this stance on Thursday, investors may take note and the euro could backtrack on some of its recent gains.

Economic Calendar

Wednesday (January 17)

• 5:00 Eurozone Final CPI. Estimate 1.4%. Actual 1.4%
• 5:00 Eurozone Final Core CPI. Estimate 0.9%. Actual 0.9%
• Tentative – German 30-year Bond Auction

Thursday (January 18)

• 3:30 German Buba President Jens Weidmann Speaks

*All release times are GMT

*Key events are in bold

DAX, Wednesday, January 17 at 12:50 EDT

Open: 13,192.00 High: 13,233.00 Low: 13,186.00 Close: 13,217.50

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