DAX edges higher, investors anxiously await FOMC statement

The DAX index has moved higher in the Wednesday session. Currently, the index is at 10,806, up 0.28% on the day. In economic news, it’s a light day. The sole indicator was German PPI, which dipped to 0.1% in November, above the estimate of -0.1%. This was its weakest gain since February. The markets are expecting the Federal Reserve to raise rate hikes by a quarter-point, to a range between 2.25 and 2.50 percent.

After plunging more than 6% in the first week of December, the DAX has steadied. Still, investors remain nervous, with global markets showing sharp volatility. In the U.S., the S&P 500 Index sank to its lowest level since October 2017. One factor which has weighed on the markets is the row over the Italian budget, which the EU said was in breach of its financial requirements. There was good news on Wednesday, after reports that Italy and the EU had reached a deal whereby Italy would lower its deficit target to 2.04%, down from its original target of 2.4%. For weeks, Italy and the EU had appeared to be on a collision course over the budget, with the EU threatening unprecedented sanctions against the Italian government.

The Federal Reserve is widely expected to raise rates on Thursday, even though rate hikes are unusual when stock markets are in a downward spiral. The Fed may “compensate” the markets and try to soothe nervous investors by sending out a cautious message about further tightening next year. Such a move would likely boost global stock markets, which posted sharp losses in early December, after hawkish remarks from Fed Chair Jerome Powell. Investors will be combing through the rate statement, which should be considered a market-mover.

Powell’s toughest FOMC meeting

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Economic Calendar

Wednesday (December 19)

  • 2:00 German PPI. Estimate -0.1%. Actual 0.1%
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.50%
  • 14:30 US FOMC Press Conference

Thursday (December 20)

  • 4:00 Eurozone Current Account. Estimate 18.4B

*All release times are DST

*Key events are in bold

DAX, Wednesday, December 19 at 7:25 EST

Open: 10,777 Low: 10825 High: 10,749 Close: 10,806

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.