Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher and has recently traded above major downtrend lines. Much of the strength can be attributed to recent comments from Federal Reserve officials, who indicated the central bank may be less aggressively lowering interest rates.
Producer prices in the euro zone increased 0.6% month-over-month in August, following a downwardly revised 0.7% advance in July, and was much higher than market estimates of a 0.3% gain.
The euro zone Services PMI declined to a seven-month low, increasing concerns over economic weakness.
The annual inflation rate in Switzerland decelerated to 0.8% in September, which compared to market estimates and August’s 1.1% increase. This is the lowest level since September 2021 and is the first time inflation declined below 1.0% since then.
Japan’s new Prime Minister Shigeru Ishiba said he believes the current environment is not suitable for another interest rate increase, suggesting he does not want the Bank of Japan to rush into further tightening its policy, after his meeting with the BOJ chief.
INTEREST RATE MARKET FUTURES
Federal Reserve speakers today are Raphael Bostic at 9:40 and Neel Kashkari at 9:40.
It is widely expected that the Federal Open Market Committee will reduce its key interest rate again at its November meeting.
Currently there is a 63% probability that the FOMC will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is a 37% chance that the FOMC will reduce its key rate by 50 basis points.
STOCK INDEX FUTURES
Stock index futures are lower, as investor sentiment remains cautious due to geopolitical tensions in the Middle East.
U.S. based employers announced 72,821 job cuts in September, which is up 53% from the 47,457 cuts that were announced in the same month in 2023, according to a report released by global outplacement and executive coaching firm Challenger, Gray & Christmas, Inc.
Jobless claims in the week ended September 28 were 225,000 as expected.
The 9:00 central time August factory orders report is predicted to show a 0.2% increase, and the 9:00 September Institute for Supply Management services index is expected to be 51.5.
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