Written Commentary
CURRENCY FUTURES
The U.S. dollar index is lower after this morning’s weak economic reports.
The euro currency declined on news that German producer prices increased less than expected in March, posting the smallest year-on-year increase since June 2021. Producer prices of industrial products were up 7.5% from the same month a year ago. Economists anticipated an increase of 9.8% year-on-year.
Markets are now fully pricing in a 25 basis point rate hike from the European Central Bank next month with approximately a 20% chance that the ECB raises rates by 50 basis points.
The Japanese yen is higher despite a report that showed Japan’s export growth slowed in March.
Interest rate differentials suggest lower prices for the U.S. dollar and higher prices for the euro currency.
STOCK INDEX FUTURES
Stock index futures declined due to weaker than expected economic reports.
Jobless claims in the week ended April 15 were 245,000 when 242,000 we anticipated.
The April Philadelphia Federal Reserve manufacturing index was negative 31.3 when negative 19.4 was estimated.
The 9:00 March existing home sales report is predicted to show 4.500 million and the 9:00 March leading indicators are expected to be down 0.4%.
Although prices are lower today, stock index futures have performed very well recently despite a variety of bearish news.
INTEREST RATE MARKET FUTURES
Yesterday’s release of the Federal Reserve’s Beige Book survey showed the U.S. economy stalled in recent weeks as hiring and inflation slowed, and access to credit became more limited.
Yesterday, New York Federal Reserve President John Williams said inflation is still high and U.S. central bank policymakers “will use monetary policy tools to restore price stability.” He also noted that recent stress in the banking system would likely weigh on economic activity.
Federal Reserve speakers today are Christopher Waller at 11:00, Loretta Mester at 11:20, Lorrie Logan at 2:00, Raphael Bostic at 4:00 and Patrick Harker at 6:45.
Underlying support for futures remains due to the belief that central banks will not be able to keep raising interest rates much longer.
Markets are currently pricing in a 25 basis point rate increase at the Fed’s May 3 policy meeting. However, easier credit conditions from the Federal Reserve are likely later this year.
The technicals and fundamentals remain supportive.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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.
