Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher and remains in a 13-day congestion pattern.
The fundamentals and technicals remain supportive to the U.S. dollar.
The inflation rate in the euro area declined to 2.8% year-on-year in January 2024 from 2.9% in the previous month, which was in line with market expectations, However, the core rate, which excludes volatile food and energy prices, ease to 3.3%, which was above predictions of 3.2%.
The Bank of England left its key interest rate unchanged at 5.25% but signaled it is likely to lower borrowing costs this year, although probably not as soon as traders expect. BOE Governor Bailey said, “We are not yet at point where we can lower rates.”
STOCK INDEX FUTURES
Stock index futures declined yesterday afternoon when the Federal Open Market Committee’s statement and Fed Chair Powell’s comments indicated the FOMC will be slow to lower its fed funds rate.
Fed Chair Powell said it will be appropriate to start cutting rates at some point this year, although he did not think a March cut is likely. As expected, the Fed kept its fed funds rate unchanged at 5.25% – 5.50%.
U.S. based employers announced plans to cut 82,307 jobs in January 2024, which is the most in ten months, This compared to 34,817 in December 2023, according to Challenger, Gray & Christmas, Inc.
Jobless claims in the week ended January 27 were 224,000 when 214,000 were anticipated.
Nonfarm productivity on an annualized basis in the fourth quarter was up 3.2% when an increase of 2.3% was predicted, and unit labor costs were up 0.5% when a gain of 2.1% was estimated.
The 8:45 central time January manufacturing PMI is anticipated to be 50.3.
The 9:00 January Institute for Supply Management manufacturing index is expected to be 47.4.
The 9:00 December construction spending report is anticipated to show a 0.5% increase.
The fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are mostly higher, especially at the long end of the curve.
Financial futures markets are predicting there is a 37% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the March 20 meeting and a 63% chance that the Fed will keep rates unchanged.
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.
