The DAX Index has edged lower in the Tuesday session, after declining 1.0 percent on Monday. Currently, the DAX trades at 12,237.14. On the release front, eurozone retail sales, posted a gain of 0.7%, above the forecast of 0.5%. ECB President Mario Draghi will speak in Frankfurt, as the ECB launches its new EUR 50 banknote. On Wednesday, all eyes will be on the Federal Reserve, which will publish the minutes of its March policy meeting. The eurozone will publish a host of services reports, including German Final Services PMI.
The DAX impressed last week, jumping 3.0 percent. On Friday, the DAX pushed above 12,300, its highest level since April 2015. The index has been boosted by strong German numbers across the German economy, as business confidence, retail sales and unemployment claims all beat their estimates last week. The German economy, the largest in Europe, is looking sharp and has enjoyed a robust first quarter in 2017. One soft spot is inflation, as German Preliminary CPI in March fell to 0.2%, short of the forecast of 0.4%. The generally positive economic picture in Germany has boosted the eurozone economy and if the strong numbers continue, the ECB will be under more pressure to tighten monetary policy.
The US economy has looked sharp in 2017, and the markets are expecting strong data for the first quarter. The CB consumer confidence report soared to 125.6 in March, and strong consumer confidence levels should translate into increased consumer spending, a key component of economic growth. GDP for the fourth quarter was revised to 2.1%, up from 1.9% in the previous GDP report. With the economy headed in the right direction, the discussions around the monetary policy tables are not whether the Fed will raise rates, but will it press the rate trigger two or three more times in 2017. The markets will be paying close attention to the minutes of the March meeting, when the Fed raised rates by a quarter-point, to a range of 0.75-1.00%. Any hints about the timing of the next hike, as well as the tone of the minutes are factors which could move the currency markets on Wednesday. The markets considered the rate statement overly cautious, and this sentiment sent the US dollar broadly lower. If the reaction to the minutes is one of disappointment, the dollar could again head downwards.
Tuesday (April 4)
- 3:00 Spanish Unemployment Change. Estimate -41.2K. Actual -48.6K
- 5:00 Eurozone Retail Sales. Estimate 0.5%. Actual 0.7%
- 10:30 ECB President Mario Draghi Speech
Upcoming Key Events
Wednesday (April 5)
- 3:15 Spanish Services PMI. Estimate 57.2
- 3:45 Italian Services PMI. Estimate 54.3
- 3:50 French Final Services PMI. Estimate 58.5
- 3:55 German Final Services PMI. Estimate 55.6
- 4:00 Eurozone Final Services PMI. Estimate 56.5
- 14:00 US FOMC Meeting Minutes
*All release times are EST
*Key events are in bold
DAX, Tuesday, April 4 at 6:40 EST
Open: 12,261.00 High: 12,274.50 Low: 12,227.50 Close: 12,236.50