S&P 500, Dow Jones and NASDAQ futures advanced to new record highs yesterday.
However, prices are lower today as the on balance stronger than expected September employment report increased the probability that the Federal Open Market Committee will hike its fed funds rate in December.
Contrary to popular belief, it is the hourly earnings portion of the employment report that has more market impact than the nonfarm portion of the report. Although nonfarm payrolls were down 33,000, when an increase of 80,000 was expected, hourly earnings increased .45%, when a gain of .3% was anticipated.
The unemployment rate fell to 4.2%, when 4.4% was estimated, which is the lowest level since February 2001.
The 2:00 central time August consumer credit report is expected to show a $16 billion increase.
The main trend for stock index futures is higher.
The U.S. dollar is higher, due to the on balance stronger than expected employment report, although a major resistance area is still holding.
The British pound partially recovered from earlier losses after Prime Minister Theresa May stood firm amid pressure to unseat her after her recent Conservative Party conference speech.
Lower crude oil prices pressured the Canadian dollar and the Australian dollar in the overnight trade.
However, the Canadian dollar is higher now on news that Canadian employment rose in September for a 10th consecutive month and workers' wages increased at their fastest rate in over 17 months.
There was additional pressure on the Australian dollar when Harper of the Reserve Bank of Australia said a lower Australian dollar would be helpful.
In addition, the currency of Australia was pressured by a report that showed weaker than anticipated retail sales.
The on balance stronger than expected employment report pressured futures across the board.
Federal Reserve speakers today are New York Federal Reserve Bank President William Dudley at 11:15, Dallas Federal Reserve Bank President Robert Kaplan at 11:45 and St. Louis Federal Reserve Bank President James Bullard at 12:50.
The Federal Reserve appears to be on track to raise its fed funds rate for a third time this year, and the fifth since late 2015, to a range of between 1.25% and 1.50%.
According to financial futures markets, the probability that the Federal Open Market Committee will increase its fed funds rate at the December 13 meeting is 93%, which compares to 83% yesterday.
The long term fundamentals for futures are mixed.
December 17 S&P 500
Support 2538.00 Resistance 2551.00
December 17 U.S. Dollar Index
Support 93.610 Resistance 94.210
December 17 Euro Currency
Support 1.17030 Resistance 1.17840
December 17 Japanese Yen
Support .88760 Resistance .89110
December 17 Canadian Dollar
Support .79210 Resistance .80380
December 17 Australian Dollar
Support .7719 Resistance .7810
December 17 Thirty Year Treasury Bonds
Support 151^4 Resistance 152^16
December 17 Gold
Support 1261.0 Resistance 1279.0
December 17 Copper
Support 3.0100 Resistance 3.0600
November 17 Crude Oil
Support 49.23 Resistance 50.98
For more information about these markets, please contact Alan at 312.242.7911 or via email at email@example.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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