CURRENCY FUTURES
Now is a good time to be neutral the U.S. dollar, at least in the short term, without the support from hawkish Federal Reserve officials.
Longer term, interest rate differential expectations remain favorable for the greenback, especially against the European currencies, since the U.S. economy appears to be holding up relatively well compared to economies in Europe.
Industrial production in the euro area fell 1.1% month-over-month in July, marking the end of a three-month period of expansion and surpassing the anticipated decline of 0.7%.
The euro currency is hovering near its weakest level in three months, as traders remain cautious ahead of the European Central Bank meeting scheduled for tomorrow. Current market pricing reflects an almost 75% probability that the central bank will hike rates by 25 basis points, which is substantially up from approximately 40% on Monday and 25% last week.
The U.K. economy shrank 0.5% month-over-month in July, which is the largest decline this year and reversing 0.5% growth in June. The median forecast called for a 0.2% fall.
STOCK INDEX FUTURES
Stock index futures are mixed.
The August consumer price index increased 0.6% as expected, and the August consumer price index, excluding food and energy, advanced 0.3% when up 0.2% was anticipated.
Mortgage applications declined 0.8% in the week ending September 8, following a 2.9% drop in the previous week, and hitting a new low since December 1996, according to data from the Mortgage Bankers Association.
The Atlanta Federal Reserve Business Inflation Expectations report for September will be released at 10:00 central time. The August report showed 2.5%.
Stock index futures will likely at least partially recover from the morning pressure without the headwind of hawkish commentary from Federal Reserve officials.
INTEREST RATE MARKET FUTURES
Futures are mostly lower.
There are no Federal Reserve speakers ahead of the upcoming Federal Open Market Committee meeting, which is in keeping with the Federal Reserve’s self-imposed blackout period.
The Treasury will auction 30-year notes today.
The Federal Open Market Committee is expected to keep its fed funds rate steady this month, while the probability of a quarter-point hike later in the year has been increasing.
Financial futures markets are predicting there is a 95% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 5% probability of a 25 basis point increase.
However, there is a 47% probability that the FOMC will hike its fed funds rate by 25 basis points at its November 1 policy meeting.
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.
Latest News & Market Commentary
ADM & Industry News
Cocoa Market Remains Weather Sensitive
September 6, 2024
Crude Oil Subdued Reaction to Jobs Data
September 6, 2024