US Dollar Underperforming the News
The U.S. dollar index is only steady when it should be higher after yesterday’s less dovish than expected Federal Open Market Committee meeting statement and Fed Chair Powell’s press conference.
The euro zone August consumer price index was down 0.4% on the month, as anticipated.
The British pound is lower after the Bank of England left its policy unchanged but hinted it is moving toward setting negative rates. The Bank’s Monetary Policy Committee kept the key rate at its current record low of 0.1%.
The Bank of Japan held its policy meeting today. The BoJ’s policy board decided to maintain its target for short-term interest rates at minus 0.1% and for the 10-year Japanese government bond yield around zero. The bank reiterated that it is ready to purchase unlimited amounts of Japanese government bonds to maintain the targets.
The Australian dollar firmed after Australian jobs data came in stronger than estimated. The actual employment change came in at up 111,000, dramatically outpacing the -50,000 estimate. The unemployment rate for August came in lower than anticipated at 6.8%, which compares to the 7.7% estimate.
STOCK INDEX FUTURES
U.S. stock index futures are lower after the Federal Reserve at yesterday’s policy meeting was less dovish than expected and offered no promises of new stimulus measures.
However, the central bank signaled that interest rates would stay near zero until 2023.
Jobless claims in the week ended September 12 were 860,000 when 850,000 were expected.
August housing starts were 1.416 million when 1.486 million were anticipated and permits were 1.470 million when 1.530 were estimated.
The September Philadelphia Federal Reserve manufacturing Index was 15 when 15.5 was predicted.
I expect at least a partial recover for stock index futures today.
INTEREST RATE MARKET FUTURES
The Federal Reserve voted to kept interest rates near zero on Wednesday and promised to keep them there until inflation is on track to “moderately exceed” the U.S. central bank’s 2.0% inflation target “for some time.”
Interest rate market futures at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep short term interest rates low for an extended period. Some analysts believe it will be several years before the Federal Reserve will be in a position to hike its fed funds rate.
However, futures at the long end of the curve, especially the 30-year Treasury bond futures may be undermined by the inflationary aspects of the Federal Reserve’s “average inflation targeting” policy.
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.