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Better Tone to Trade Situation in Euro Zone

by AFS Archer Financial Svcs | Jul 05, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures are higher due to signs that the Trump administration may ease back on plans for tariffs on European autos. There were reports that the U.S. ambassador to Germany told German auto executives that President Donald Trump could abandon his threatened tariffs in exchange for concessions.

The Automatic Data Processing employment change report showed 177,000 jobs were created in June. This report missed the consensus estimate of a gain of 190,000 jobs.

Also, the number of Americans filing applications for new unemployment benefits increased last week, but remained near historic lows. Initial jobless claims were up 3,000 to 231,000 in the week ended June 30. Economists expected 225,000 new claims last week.

The 8:45 central time June Services PMI is expected to be 56.5 and the 9:00 June Institute for Supply Management nonmanufacturing index is anticipated to be 58.4.

Overall, U.S. stock index futures are holding up relatively well in spite of the ongoing global trade uncertainties.

CURRENCY FUTURES

The U.S. dollar is lower and the euro currency is higher on news that German factory orders surged, which ended a series of declines this year. The 2.6% gain was more than twice as much as the 1.1% median estimate and is the first increase this year. 

The British pound is higher after Bank of England Governor Mark Carney said the U.K. economy is supporting the case for higher rates. He said incoming data had given him “greater confidence” that a sluggish first quarter was primarily due to poor weather.

Financial futures markets are now predicting there is an 80% probability that the BoE will hike its key lending rate in August. The probability was 75% before his speech.

INTEREST RATE MARKET FUTURES

Futures are lower due to rising expectations of a fed funds rate hike in September. In addition, flight to quality longs were liquidated in light of stronger stock index futures. 

At 1:00 the Federal Open Market Committee will release the minutes of its June 13 policy meeting. 

There are no Federal Reserve speakers scheduled for today. 

The probability of a fed funds rate hike at the Federal Open Market Committee’s September 26 meeting is 80%, which compares to 70% on Wednesday.

The longer term trend for futures is lower.

SUPPORT AND RESISTANCE

 

September 18   S&P 500

Support    2707.00       Resistance    2742.00 

September 18   U.S. Dollar Index

Support    93.820         Resistance    94.450 

September 18   Euro Currency

Support    1.16850       Resistance    1.17980

September 18   Japanese Yen

Support    .90650         Resistance    .91250 

September 18   Canadian Dollar

Support    .76010         Resistance    .76470 

September 18   Australian Dollar

Support    .7355           Resistance    .7438 

September 18   Thirty Year Treasury Bonds

Support    144^16        Resistance    145^16 

August 18   Gold

Support    1249.0         Resistance    1267.0 

September 18   Copper

Support    2.8300         Resistance    2.9450 

August 18   Crude Oil

Support    73.39           Resistance    75.11

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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