US Dollar Likely to Give Back Gains
The U.S. dollar index is higher on safe-haven buying.
In the last two months interest rate differential expectations have turned against the greenback.
Lower prices are likely for the greenback today from the currently higher levels.
STOCK INDEX FUTURES
Stock index futures are lower due to a deteriorating outlook for economic growth, recent hawkish speeches from Federal Reserve policymakers and following mostly lower Asian equity markets.
Traders remain cautious ahead of the Federal Open Market Committee minutes release on Wednesday, which could provide further clues on the pace of the Fed’s rate hikes.
The October Chicago Federal Reserve national activity index was negative 0.50 when positive 0.17 was expected.
Despite lower prices today, the fundamentals and technicals for stock index futures are improving.
INTEREST RATE MARKET FUTURES
Last week Federal Reserve Bank of Boston President Susan Collins reiterated that more interest rate increases are needed to tame inflation and that her view on how high interest rates will need to go is unaffected by recent economic reports.
The severely inverted yield curve suggests weaker U.S. economic growth lies ahead. Recently the spread between the 2-year and 10-year note yields was at its deepest inversion in over 40 years.
The Treasury will auction two-year and five-year notes today.
The technicals and fundamentals are looking more constructive for the interest rate market futures.
According to financial futures markets currently, there is a 76.0% probability that the Federal Open Market Committee will increase its fed funds rate by 50 basis points at the December 14 meeting and a 24.0% probability that the rate will be hiked by 75 basis points.
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