DAX Steady Ahead of Fed Rate Announcement

The DAX index has posted slight gains in the Wednesday session. Currently, the DAX is trading at 12,327, up 0.16% on the day. It’s a quiet day on the economic front, with just one indicator, the German 10-year bond auction. In the US, the Federal Reserve is widely expected to raise the benchmark rate to a range of between 1.50% and 1.75%. On Thursday, Germany and the euorozone release manufacturing PMI, and Germany will also publish the Ifo Business Climate.

The markets are keeping a close eye on the Federal Reserve, which will release a rate statement later in the day. The Fed is expected to raise rates for the first time in 2018, and Fed Chair Jerome Powell will preside as chair of the FOMC for the first time, followed by Powell’s first post-FMOC press conference. The Fed has sounded marginally more hawkish recently – will this trend continue in the rate statement? The Fed rate projection remains at three rates for 2018, but with the US economy continuing to perform well, this forecast could be revised upwards to four rates. If the rate statement is unexpectedly hawkish, the US dollar could respond with gains.

Investors on both sides of the English Channel have been struggling with the ongoing uncertainty over the Brexit negotiations, as Britain and the European Union have clashed over a number of key issues. Earlier this week, there was some welcome positive news, as the two sides announced that there would be a transition period following the UK’s departure from the EU in March 2019. The transition deal will kick in at that time, lasting until December 2020. The deal covers the rights and status of EU citizens in the UK and British citizens in the EU, and allows the UK to pursue new trade agreements during that time. There are still some issues to iron out, such as the Northern Ireland border. The transition period is a major, positive development, in that it will enable Britain to enjoy the benefits of the common market, albeit without a seat at the table.

Everything that needs to be said has already been said

Economic Calendar

Wednesday (March 21)

• Tentative – German 10-year Bond Auction

Thursday (March 22)

• 4:30 German Flash Manufacturing PMI. Estimate 59.8
• 4:30 German Flash Services PMI. Estimate 55.0
• 5:00 Eurozone Flash Manufacturing PMI. Estimate 58.1
• 5:00 Eurozone Flash Services PMI. Estimate 56.0
• 5:00 German Ifo Business Climate. Estimate 114.7

*All release times are EST

*Key events are in bold

DAX, Wednesday, March 21 at 6:15 EDT

Prev. Close: 12,307 Open: 12,347 High: 12,347 Low: 12,277 Close: 12,327

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