Written Commentary
CURRENCY FUTURES
The euro currency is sharply lower on news of a substantially slower rate of inflation in Germany. Preliminary numbers for December from the country’s largest federal states annual inflation slowed to 8.7% in December from 10.4% in November and a peak of 11% in October.
A lower inflation rate puts pressure on the European Central Bank to be less hawkish.
The U.S. dollar index strengthened sharply against a basket of major currencies, especially against risk sensitive currencies such as the Australian and New Zealand dollars.
The Japanese yen is higher today and is being supported by the belief that the Bank of Japan may surprise markets again by tightening monetary policy next month.
STOCK INDEX FUTURES
Stock index futures are higher.
The 8:45 central time December manufacturing PMI final is expected to be 46.2.
The 9:00 November construction spending report is anticipated to show a 0.4% decline.
There is a seasonal tendency for the last five days of a calendar year and the first two trading days of the new year for stock index futures to trade higher. If this seasonal works it would mark the seventh one in a row.
INTEREST RATE MARKET FUTURES
Futures are higher across the board today.
There is a triple top in the March fed funds futures at 95.3150, which will probably be taken out on the upside.
Some analysts are pointing out that the Federal Reserve is shrinking its balance sheet more slowly than the planned pace, which suggests a less hawkish Fed.
According to financial futures markets currently, there is a 74.0% probability that the Federal Open Market Committee will increase its fed funds rate by 25 basis points at the February 1 policy meeting and a 26.0% probability that the rate will be hiked by 50 basis points.
Interested in more futures markets? Explore our Market Dashboards here.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
