DAX Daily Fundamental Forecast – December 29, 2016

The DAX finally had a very small correction which we believe would continue for today as well as some weak data from the US took the wind out of the dollar strength and also dampened the overall mood of the markets as it could point to a slowdown in the economy of the US which could in turn affect the speed at which the Fed is likely to increase the interest rates in the US.

Yesterday, we saw the release of the pending home sales data from the US which came in at a very low value of -2.5% against the expected value of 0.5% and this was a bit of a shocker for the markets as such weak data was not expected at this point of time. This led to a correction in the stock markets in the US and they closed lower for the day and this effect is likely to be felt in the DAX today and we may see some correction in the index for today when it opens. These are still thin markets which we are dealing with and it is tough to form an opinion based on the reaction that we see in this kind of a market but so far, the market seems to be a bit jittery about the weak data as it is likely to delay the hike that the market expects from the Fed.

Looking ahead to today, we do not have any major economic news to be released from the Eurozone for today and so, based on the influence from the US markets, we can see a bearish opening to the DAX for today and this theme might also continue for the rest of the day though the size of the correction is something that remains to be seen, as we are in times of low liquidity and so the reactions might be muted.