Written Commentary
CURRENCY FUTURES
There is some recovery in the September U.S. dollar index futures today. Yesterday the September U.S. dollar index fell to a new two-year low and took out the double bottom at the 92.475 – 92.510 area.
Some of the bears on the U.S. dollar are speculating that the Federal Reserve may loosen its approach to inflation, which could happen at its next policy meeting in September.
The U.S. dollar is likely to trade lower from current higher levels today and longer term.
The euro area annual inflation rate in July was 0.4%, which is up from 0.3% in June. A year earlier the rate was 1.0%.
Some of the bears on the U.S. dollar are speculating that the Federal Reserve may loosen its approach to inflation, which could happen at its next policy meeting in September.
The U.S. dollar is likely to trade lower from current higher levels today and longer term.
The euro area annual inflation rate in July was 0.4%, which is up from 0.3% in June. A year earlier the rate was 1.0%.
STOCK INDEX FUTURES
U.S. stock index futures are mostly higher despite the stalemate in Washington over a fresh round of economic stimulus, along with ongoing tensions between the U.S. and China.
NASDAQ futures advanced to a record in the overnight trade.
Mortgage applications to purchase a home increased 1% for the week and were 27% higher compared with one year ago.
The technical picture remains constructive for stock index futures.
INTEREST RATE MARKET FUTURES
The benchmark 10-year Treasury note yield ticked lower to 0.652% from 0.669% yesterday.
The Federal Reserve will release the minutes of the July 29 FOMC meeting at 1:00. The release is expected to provide more insight into changes that Fed officials are weighing for monetary policy.
The Treasury will auction $25 billion in 20 year bonds today.
Thomas Barkin of the Federal Reserve will speak at 2:00 central time.
Interest rate market futures, especially at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep interest rates low for an extended period.
The next Federal Open Market Committee meeting is scheduled for September 16. Financial futures markets are predicting there is a 90% probability that the FOMC will maintain its fed funds target rate at zero to 25 basis points.
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