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U.S. Dollar Continues to Underperform

by Archer Financial Services | Jun 13, 2017
By Alan Bush | Senior Financial Economist at ADMIS   


STOCK INDEX FUTURES

Small business owners maintained steady confidence in the economy in May. The May National Federation of Independent Business small business optimism index was unchanged at 104.5 from a month earlier, which was as expected.     

The May producer price index for final demand, which measures changes in the prices that U.S. companies receive for their goods and services, was unchanged from April, as anticipated. 

The May producer price index, excluding food and energy, grew .3% in May from the previous month. Economists had expected a .1% increase.

Today is the first day of a two day Federal Open Market Committee meeting.

Once the Federal Open Market Committee meeting is out of the way, expect a new leg up, including record highs, including for the NASDAQ.

The main trend for stock index futures is higher. 

  

CURRENCY FUTURES

Even though the Federal Open Market Committee is widely expected to hike its fed funds rate tomorrow, the U.S. dollar is lower today on ideas that the accompanying statement from the Fed will indicate a dovish policy outlook.

Longer term, we expect the U.S. dollar will continue to underperform.

The euro currency is higher in spite of news that German economic sentiment unexpectedly declined in June.

A measure of economic expectations fell to 18.6 from 20.6 in May, which compares to a forecast of 21.5.  

The British pound is higher after a report showed consumer prices in the U.K. increased in May at the fastest annual rate for almost four years. Annual inflation in the U.K. accelerated to 2.9%, when analysts were expecting inflation to remain steady at April's 2.7% rate.

The Bank of England is expected to keep the U.K.'s benchmark interest rate steady when it announces its policy decision on Thursday.    

The Swiss National Bank will hold its monetary policy meeting on Thursday and the Bank of Japan will hold its monetary policy meeting on Friday.

The Australian dollar is lower on news that business conditions eased slightly in May in Australia.

A business conditions index fell 1 point to 12 points from April.  This survey suggests the economy slowed in the first quarter to its slowest annual pace since 2009. 

     

INTEREST RATE MARKET FUTURES

Flight to quality longs continue to be liquidated.

The Treasury will auction 30 year bonds today. This supply is adding to the pressure at the long end of the curve.

The probability that the Federal Open Market Committee will increase interest rates at tomorrow’s meeting is 99%, which compares to 96% yesterday. 

 

SUPPORT AND RESISTANCE

June 17   S&P 500

Support    242400       Resistance    2439.00

 

June 17   U.S. Dollar Index

Support    96.830         Resistance    97.300

 

June 17    Euro Currency

Support    1.11740       Resistance    1.12410

 

June 17    Japanese Yen

Support    .90610         Resistance    .91150

 

June 17    Canadian Dollar

Support    .75010         Resistance    .75660

 

June 17   Australian Dollar

Support    .7517           Resistance    .7576

 

September 17   Thirty Year Treasury Bonds

Support    153^10        Resistance    154^8

 

August 17   Gold

Support    1259.0         Resistance    1273.0

 

July 17   Copper

Support    2.5800         Resistance    2.6300

 

July 17   Crude Oil

Support    45.45           Resistance    47.10

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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