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Trade Frictions Continue

by Archer Financial Services | Apr 02, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES 

Stock index futures fell after overnight China announced that starting today it would impose tariffs by up to 25% on 128 U.S. products in response to U.S. duties on imports of aluminum and steel.

The negative market impact of this appeared to be partially mitigated when China urged trade talks with the U.S. to prevent greater damage to relations.

The 8:45 central time March manufacturing PMI is expected to be 55.7.

The 9:00 March Institute for Supply Management manufacturing index is anticipated to be 60 and the 9:00 February construction spending report is estimated to be up .5%.

Ongoing trade issues will only temporality pressure futures.  

 

CURRENCY FUTURES

The U.S. dollar is lower and the euro currency is higher in spite of increasing probabilities of a fed funds rate hike in June.

Longer term, the currency of the euro zone is likely to be supported by the belief that the European Central Bank could increase interest rates in the first quarter of next year.

I continue to anticipate the double top resistance at the 1.26500 - 1.26580 area in the June euro currency to be taken out, although it may take some time.

The Japanese yen is higher in spite of news that the Bank of Japan's quarterly “tankan” survey showed confidence among Japan's large manufacturers weakened for the first time in two years in the first quarter.

Large manufacturers' sentiment was at 24 in the first three months of this year, which compared with 25 in the previous survey that was taken in December. 

 

INTEREST RATE MARKET FUTURES

Futures are lower due to increasing prospects of tighter credit from the Fed.

Also, there appeared to be no flight to quality buying in spite of the ongoing trade frictions between the U.S. and China.

Minneapolis Federal Reserve Bank President Neel Kashkari will speak at 5:00 this afternoon.

The probability of a fed funds rate hike from the Federal Open Market Committee at the June 13 meeting is 85%, which compares to 79% late last week.

 

SUPPORT AND RESISTANCE

 

June 18   S&P 500

Support    2623.00       Resistance    2644.00

 

June 18   U.S. Dollar Index

Support    89.330         Resistance    89.730

 

June 18   Euro Currency

Support    1.23730       Resistance    1.2424

 

June 18   Japanese Yen

Support    .94310         Resistance    .94690

 

June 18   Canadian Dollar

Support    .77550         Resistance    .77850

 

June 18   Australian Dollar

Support    .7661           Resistance    .7701

 

June 18   Thirty Year Treasury Bonds

Support    145^26        Resistance    146^16

 

June 18   Gold

Support    1326.0         Resistance    1347.0

 

May 18   Copper

Support    3.0350         Resistance    3.0750

 

May 18   Crude Oil

Support    64.02           Resistance    65.55


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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