The DAX index has posted strong losses in the Thursday session. Currently, the index is trading at 12,366.50 down 0.82% since the Wednesday close. On the release front, German Ifo Business Climate dipped to 115.4, short of the estimate of 117.1 points. This marked the lowest level since September. Later in the day, the ECB releases the minutes of its January policy meeting. On Friday, Germany releases Final GDP and the eurozone publishes Final CPI.

German and eurozone confidence and manufacturing indicators pointed downwards this week, and the euro has responded with a soft week, losing 1.0 percent. The well-respected ZEW economic sentiment reports dropped in February in Germany and the eurozone, although both indicators managed to beat their estimates. Eurozone consumer confidence remains weak, and the indicator dipped to zero, shy of the forecast of 1 point. On the manufacturing front, eurozone and German PMIs both fell in February and missed the forecasts. At the same time, both releases pointed to strong expansion, a reflection of strong global demand for European products.

With the recent stock market turmoil over fears of more rate hikes, the Federal Reserve minutes were highly anticipated. As expected, the benchmark rate was left unchanged at a rate between 1.25% and 1.50%. The message from policymakers was that further rate hikes could be in the cards, due to strong economic conditions in the US. In the words of the minutes, policymakers “anticipated that the rate of economic growth in 2018 would exceed their estimates of its sustainable longer-run pace and that labor market conditions would strengthen further”. At the December meeting, the Fed penciled in three rate hikes in 2018, and there was no reference to a quicker pace of hikes in the January minutes. As for inflation, the minutes did not reveal any concern. Most Fed members were of the opinion that inflation would rise towards the Fed target of 2 percent.


Economic Calendar

Thursday (February 22)

  • 4:00 German Ifo Business Climate. Estimate 117.1. Actual 115.4
  • 7:30 ECB Monetary Policy Meeting Accounts

Friday (February 23)

  • 2:00 German Final GDP. Estimate 0.6%
  • 5:00 Eurozone Final CPI.  Estimate 1.3%

*All release times are EST

*Key events are in bold


DAX, Thursday, February 22 at 7:05 EDT

Open: 12,372.50 High: 12,403.00 Low: 12,281.00 Close: 12,366.50

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