The DAX Index has headed higher in the Wednesday session. Currently, the DAX is trading at 11,989.50 points, its highest level since February 23. The index is poised to punch past the symbolic 12,000 level. On the release front, German indicators are in the spotlight. Unemployment Change declined by 14 thousand, above the forecast of -10 thousand. German Final Manufacturing PMI improved to 56.8, close to the estimate of 57.0 points. Later in the day, we’ll get a look at Preliminary CPI, which is expected to rebound with a gain of 0.6%. On Thursday, the eurozone releases CPI reports.
There was plenty of anticipation in the air ahead of President Trump’s speech to Congress. In the end, however, the speech was short on specifics and the markets haven’t shown much reaction in the Wednesday session. Trump promised ‘massive’ tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, ‘financed through both public and private capital’. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we’ve seen in the past.
With Federal Reserve policymakers continuing to sound hawkish about a rate move, the US dollar could make some headway against the euro, which could weigh on the DAX. On Tuesday, FOMC members William Dudley and John Williams both hinted at an imminent hike by the Fed, which raised the odds of a March hike at 66%, according to Reuters. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for ‘serious consideration’ at the March policy meeting. The markets will be listening closely to speeches from other FOMC members this week, culminating in speeches from Janet Yellen and Fed Governor Stanley Fischer on Friday.