Written Commentary
CURRENCY FUTURES
The U.S. dollar index remains in an 11-day congestion pattern.
The fundamentals and technicals remain supportive to the U.S dollar.
The economic sentiment indicator in the euro area declined to 96.2 in January 2024, as predicted by economists, but is down from December’s seven-month high of 96.3.
Germany’s gross domestic product shrank 0.3% from October to December compared with the previous quarter. This compares with flat growth in the third quarter.
Money markets are pricing in a first rate cut of 25 basis points from the European Central Bank in April, although the ECB President Christine Lagarde commented at last week’s monetary policy meeting that it would be premature for policymakers to discuss interest rate reductions.
The Bank of England is expected to leave interest rates unchanged at 5.25% at its policy meeting on Thursday.
STOCK INDEX FUTURES
Stock index futures are lower today after S&P 500 and Dow futures advanced to record highs yesterday.
Today is the first day of the two-day Federal Open Market Committee meeting.
The 9:00 central time January consumer confidence index is expected to be 112.5.
The 9:00 December job openings and labor turnover survey (JOLTS) is anticipated to be 8.7 million.
The fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are mostly higher, especially at the long end of the curve.
There are no Federal Reserve speakers scheduled for today, which is in keeping with the Federal Reserve’s “blackout period” in advance of a Federal Open Market Committee meeting.
Financial futures markets are predicting there is a 2.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the January 31 policy meeting, and there is a 98% probability that the Fed will keep rates unchanged.
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