Written Commentary
CURRENCY FUTURES
The U.S. dollar index was higher in the overnight trade but is lower now as a result of the larger than estimated jobless claims number.
Interest rate differentials expectations are neutral for the U.S. dollar as major central banks this year are likely to lower key interest rates.
The European Central Bank cut its key interest rate by 25 basis points at its monetary policy meeting today, as expected.
Retail sales in the euro area fell 0.5% month-over-month in April 2024, following a downwardly revised 0.7% increase in March and was worse than forecasts of a 0.3% drop.
Factory orders in Germany declined by 0.2% month-over-month in April 2024, missing market predictions of 0.3% growth and following a revised 0.8% drop in March.
Exports of goods from Australia shrank 2.5% on a monthly basis to a 28-month low in April 2024, mainly dragged down by metal ores and minerals.
The Bank of Canada’s yesterday announced a 25 basis point reduction in its key interest rate to 4.75%, which was in line with market expectations. Analysts are expecting another cut in July.
STOCK INDEX FUTURES
Stock index futures are mixed.
Jobless claims in the week ended June 1 were 229,000 when 216,000 were expected.
Non-farm productivity on an annualized rate in the first quarter increased 0.2% as anticipated, and unit labor costs on an annualized basis were up 4.0% when a gain of 4.7% was estimated.
The short term outlook has become neutral, as the bullish influence of pressure on the Federal Reserve to lower interest rates is being offset by the bearish influence of increasing prospects of a weaker U.S. economy.
The bullish influence of lower interest rates will dominate In the long term.
INTEREST RATE MARKET FUTURES
Futures are lower today, although yesterday the U.S. 30-year Treasury bond futures advanced to the highest level since April 1, 2024.
Financial futures markets are predicting there is a 69% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
The fundamentals are becoming more bullish due to increasing indications that the U.S. economy is weakening. In addition, there is growing pressure on the Federal Reserve to ease monetary policies.
Higher prices are likely, especially futures at the long end of the curve.
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.
