Written Commentary
By Alan Bush
STOCK INDEX FUTURES
Stock index futures are sharply higher after the much better than expected May U.S. employment numbers were released.
Nonfarm payrolls increased 2,509,000 when economists anticipated a decline of 7,725,000.
The unemployment rate was 13.3%, which compares to the estimated 19.8% and average hourly earning were up 3.8% when economists predicted a 0.9% gain.
June S&P 500 futures advanced to their highest level since February 27 and NASDAQ futures are closing in on their record highs.
The 2:00 central time April consumer credit report is expected to show a $14.0 billion decline.
Stock index futures have been performing well in spite of a variety of old and new geopolitical concerns.
CURRENCY FUTURES
It is starting to look like the U.S. dollar may be bottoming after being down for six days.
The euro currency appears to be making a near term top now that much of the bullish news is out, especially yesterday’s news that the European Central Bank at its regularly scheduled policy meeting almost doubled its asset-buying program. The ECB is adding EUR600 billion ($675 billion) to the EUR750 billion that it announced in March.
The euro is higher despite news that German manufacturing orders declined sharply on the month in April. Manufacturing orders fell 25.8% in April. Economists expected orders to fall 19.1% from the previous month. On an annual basis, orders declined 36.6%.
The British pound is higher despite few signs of progress in the latest E.U.-U.K. trade talks.
The Canadian dollar and the Australian dollar are higher in light of higher crude oil prices.
INTEREST RATE MARKET FUTURES
Futures are sharply lower in response to the surprise increase in nonfarm payrolls when a large decline in payrolls was expected.
The next Federal Open Market Committee meeting is scheduled for June 9-10. According to financial futures markets there is a 91.4% probability that the FOMC will leave its fed funds rate unchanged at zero to 25 basis points. Also, there is an 8.6% probability of a 25-basis point increase at next week’s meeting.
This suggests that there is a growing belief that there will be recovery in the economy later this year.
SUPPORT & RESISTANCE
June 20 S&P 500
Support 3104.00 Resistance 3185.00
June 20 U.S. Dollar Index
Support 96.380 Resistance 97.140
June 20 Euro Currency
Support 1.12780 Resistance 1.13890
June 20 Japanese Yen
Support .91100 Resistance .91770
June 20 Canadian Dollar
Support .74000 Resistance .74720
June 20 Australian Dollar
Support .6927 Resistance .7021
June 20 Thirty Year Treasury Bonds
Support 172^8 Resistance 176^0
August 20 Gold
Support 1680.0 Resistance 1725.0
July 20 Copper
Support 2.4800 Resistance 2.5750
July 20 Crude Oil
Support 36.95 Resistance 39.68
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