The likelihood of a 50 basis point rate cut by the Fed in September jumped to 45.0% on Thursday from 14.0% on Wednesday, according to the CME FedWatch tool. A soft landing in the US and a more dovish interest rate path from the Fed could spur buyer demand for riskier assets.
US Market Trends
On Thursday, September 12, the U.S. stock market continued to rise from the previous day's trading, with the Dow Jones Industrial Average and S&P 500 rising 0.58% and 0.75%, respectively, and the Nasdaq Composite Index rising 1.00%.
US Economic Calendar
Investors will be focused on the Michigan Consumer Confidence Index on Friday, September 13. Economists expect the index to rise to 68.0 in September from 67.9 in August. A better-than-expected reading could ease concerns about a hard landing in the U.S. and support demand for riskier assets.
However, investors should also consider subcomponents such as consumer expectations. Concerns about the economic outlook and the labor market could have a negative impact on riskier assets. Signs of a US recession could impact demand for DAX-listed stocks as investors grow hopeful about a possible 50 basis points rate cut from the Fed.
Experts' views on the Federal Reserve's interest rate path
Nick Timiraos, chief economics reporter at the Wall Street Journal, quoted John Faust, a former senior adviser to Powell.
“I don't think we're in a position to go preemptively to 50 percent. But I'm a little bit more willing to start at 50 percent. And I think there's a good chance the FOMC will get there.”
Short-term outlook
The near-term movement of the DAX will likely depend on upcoming US data and central bank comments. If an ECB rate cut and multiple Fed rate cuts in Q4 2024 are supported, the DAX could approach 18,750. However, concerns of a hard landing could overshadow dovish interest rate comments from the ECB and Fed, and the DAX could fall to 18,000.
In the futures market, the DAX and Nasdaq Mini rose 79 and 3 points respectively.
Investors should pay attention to central bank statements and economic indicators that may affect risk sentiment. Monitor breaking news, economic calendars and expert commentaries to manage your trading strategy.
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DAX Technical Indicator
Daily Chart
The DAX is above the 50-day and 200-day EMAs, sending out bullish price signals.
A breakout from Thursday's high of 18,596 could signal a rise to 18,750. Furthermore, a rally to 18,750 could bring the index to a new all-time high of 18,991.
With sentiment fluctuating on the Fed's interest rate path, economic data from the Eurozone and the US need to be taken into account.
Conversely, a break below the 50-day EMA could signal a drop to 18,200.
The 14-day RSI is at 52.61, suggesting a return to the all-time high before entering overbought territory.
