Written Commentary
CURRENCY FUTURES
The U.S. dollar index is lower today but came off its lows when the bullish U.S. personal income report was released.
The greenback remains is a 9-day congestion pattern.
The next major support for the March U.S. dollar index is the breakaway gap made on January 16 at the 102.410 – 102.495 area.
Interest rate differentials in January have become more supportive to the greenback.
The German GfK Consumer Climate Indicator weakened from -25.4 to -29.7 for February. Economists predicted an improvement to -24.5. Income expectations fell 13.1 points to -20, which was the lowest level since March 2023. Economic expectations for the next 12 months declined 6.2 points to -6.6 points, which was the lowest since December 2022.
Japan’s annual business-to-business service inflation hit 2.4% in December, which matches the previous month’s almost nine-year high.
STOCK INDEX FUTURES
Stock index futures are mixed.
Personal income in December increased 0.3% as expected, and personal consumption expenditures were up 0.7% when up .4% was anticipated.
The 9:00 central time December pending home sales index is estimated to be up 1.3%.
Futures are performing better than the news would suggest, which suggests futures will trend higher today.
The fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are mixed.
Futures are holding up well today despite the bearish on balance personal income report.
There are no Federal Reserve speakers 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 3.0% 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 97.0% probability that the Fed will keep rates unchanged.
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