Market Snapshot – DAX Higher on ECB Announcement

Colin First

DAX Finally Free of 13000

The DAX index shot higher following the announcement from the ECB to extend the QE beyond September 2018. The market had been under the impression that with the data from the Eurozone improving, the ECB would be inclined to tapering the QE much sooner. But the ECB went on to cut the QE but said that the program would continue through the next year. This meant that a flush of funds would still be available for the stock markets and it would not lead to a liquidity crunch as far as the stock markets are concerned. This has helped to push the DAX through the 13000 region and once it broke free of that region, it has since pushed ahead towards the 13200 region and beyond as we write this The next target appears to be 13500 in the short term and we believe that the effect of the ECB announcement would be enough for the bulls to continue buying into the DAX.

Uncertainty Looms in Catalonia

The uncertainty in Catalonia continues to dominate the markets and has caused the euro to continue to weaken. If the ECB did its bit yesterday in weakening in the euro by extending the QE, the uncertainty in the Spanish region has further weakened the euro over the last couple of days and it looks as though the euro would continue to be under pressure in the short and medium term. The dollar is also set to gain strength if the reports of the next Fed Chair being the hawkish John Taylor turns out to be true. The combination of good data from the US and the choice of the Fed Chair could place the dollar in a strong position in the coming days.

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