Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher and has broken out above a two-week congestion pattern.
There was support for the greenback when the Organisation for Economic Co-operation and Development (OECD) Chief Economist said the U.S. economy is showing “remarkable strength” compared with Europe. The Paris-based Organisation revised up its forecasts for U.S. growth next year, while it lowered expectations for most of the euro area.
Interest rate differentials remain supportive to the greenback.
Industrial producer prices in the euro area fell 10.6% year-on-year in December 2023, which was the largest decline in three months and compared to forecasts of down 10.5%.
German exports fell more than expected in December. Exports declined by 4.6% compared with the previous month when a 2.0% decrease was predicted.
STOCK INDEX FUTURES
The 8:45 central time January PMI composite is expected to be 52.9.
The January Institute for Supply Management services index is anticipated to be 52.1.
The fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are lower.
Federal Reserve Chair Jerome Powell’s comments in a television appearance on Sunday contained no major surprises. The Fed Chair reiterated what he said last week, predicting that Fed policymakers will likely wait until after March to lower interest rates.
Raphael Bostic of the Federal Reserve will speak at 1:00.
Financial futures markets are predicting there is a 15% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the March 20 meeting and an 85% chance that the Fed will keep rates unchanged.
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