Futures Commentary and Analysis

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Risk Off Yesterday, But Risk On Today
Alan Bush - IF - Wed Aug 23, 8:56AM CDT

August 23, 2017

STOCK INDEX FUTURES

Stock index futures are lower as U.S. political developments kept investors on edge, including the possibility that President Trump might terminate the NAFTA trade agreement.

The 8:45 central time August U.S. manufacturing PMI is expected to be 53.3 and the 9:00 July new home sales report is anticipated to increase .3% to 612,000.

On Friday Fed Chair Yellen will speak at the Kansas City Federal Reserve’s annual conference at Jackson Hole, Wyoming.

Once the political tensions settle down it will be the bullish globally low interest rates that take stock index futures higher.

CURRENCY FUTURES

Yesterday the U.S. dollar firmed due to a report that President Trump’s top aides and congressional leaders were making progress on a tax reform plan.

However, today the U.S. dollar fell against the flight to quality currencies, the Swiss franc and the Japanese yen, as new questions emerged on tax reform.

The main trend for the greenback is lower, as interest rate differential expectations remain bearish.

The euro currency held near the day's highs as a result of strong readings on German and French PMI surveys.

The euro zone economy maintained its growth momentum in August, supported by an increase in manufacturing and expanding exports.

A composite PMI for the euro zone increased slightly to 55.8 from 55.7 in July, which takes it to a two month high. Economists had forecast a decline to 55.4.

On Friday, European Central Bank President Mario Draghi will deliver a speech at the Fed’s Jackson Hole symposium. It is anticipated that Draghi will refrain from delivering a new policy message at that time.

However, speculation remains that the ECB could announce plans to wind down its quantitative easing program this year, possibly at its September 7 policy meeting.

The main trend for the euro currency is higher.

INTEREST RATE MARKET FUTURES

Flight to quality longs were reestablished today, especially at the long end of the curve.

The probability that the Federal Open Market Committee will increase its fed funds rate at the December 13 meeting is 37%, which compares to 36% yesterday.

Dallas Federal Reserve Bank President Robert Kaplan will speak at 12:05.

Central bankers will meet at the Jackson Hole economic symposium Thursday through Saturday and investors will be closely watching for any hints of changing monetary policy plans.

The long term fundamentals for futures are mixed.

SUPPORT AND RESISTANCE

September 17 S&P 500

Support 2437.00 Resistance 2457.00

September 17 U.S. Dollar Index

Support 93.010 Resistance 93.570

September 17 Euro Currency

Support 1.1755 Resistance 1.1833

September 17 Japanese Yen

Support .91050 Resistance .91890

September 17 Canadian Dollar

Support .79270 Resistance .79770

September 17 Australian Dollar

Support .7891 Resistance .7930

September 17 Thirty Year Treasury Bonds

Support 155^8 Resistance 156^12

December 17 Gold

Support 1286.0Resistance 1303.0

December 17 Copper

Support 2.9850 Resistance 3.0200

October 17 Crude Oil

Support 47.21 Resistance 48.17

For more information about these markets, please contact Alan at 312.242.7911 or via email at alan.bush@admis.com. Thank you.

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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 risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. 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.


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