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U.S. Dollar Lower on Dovish Fed Comments

by Archer Financial Services | Aug 08, 2017
By Alan Bush | Senior Financial Economist at ADMIS     



STOCK INDEX FUTURES

Futures are lower due to downbeat economic data coming from China and Germany. China's imports were up 11% in July versus the increase of 17% in June and exports increased 7.2%, which compares to up 11.3% in June. Germany's trade surplus grew in June, but its imports and exports fell.      

The July National Federation of Independent Business small business optimism index increased 1.6 points in July to 105.2, which is the highest level since February and just under the 12 year high that was registered in January. The median estimate called for 103.5.

The 9:00 central time June JOLTS (Job Openings and Labor Turnover Survey) report is expected to total 5.7 million. This report tracks the monthly change in job openings and offer rates on hiring and quits. 

The main trend for stock index futures is higher. 

 

CURRENCY FUTURES

The U.S. dollar was lower yesterday and also today after yesterday St. Louis Federal Reserve   Bank President James Bullard said the Fed can leave interest rates where they are for now because inflation is not likely to increase very much even if the U.S. job market continues to improve.

Yesterday Minneapolis Federal Reserve Bank President Neel Kashkari talked about the inflation rate being below target. These comments appeared to be dovish on balance, which undermined the value of the U.S. dollar.

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

The euro currency is higher and there and there is underlying support for the euro, as speculation remains that the European Central Bank 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 is higher.

The Canadian dollar and the Australian dollar are higher in spite of slightly lower crude oil prices. There was some support for the Australian dollar due to additional gains in iron ore prices.

 

INTEREST RATE MARKET FUTURES

The Treasury will auction three year notes today.

The probability that the Federal Open Market Committee will increase its fed funds rate at the December 13 meeting is 50%, which is unchanged from yesterday.

The long term fundamentals for futures are mixed.

 

SUPPORT AND RESISTANCE

September 17   S&P 500

Support    2469.00       Resistance    2481.00

 

September 17   U.S. Dollar Index

Support    93.030         Resistance    93.360

 

September 17    Euro Currency

Support    1.1811         Resistance    1.1855

 

September 17    Japanese Yen

Support    .90330         Resistance    .90930

 

September 17    Canadian Dollar

Support    .78810         Resistance    .79230

 

September 17   Australian Dollar

Support    .7900           Resistance    .7948

 

September 17   Thirty Year Treasury Bonds

Support    153^24        Resistance    154^16

 

December 17   Gold

Support    1260.0         Resistance    1275.0

 

September 17   Copper

Support    2.8900         Resistance    2.9200

 

September 17   Crude Oil

Support    49.03           Resistance    49.81


 

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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