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Trade Issues And Employment Data

by AFS Archer Financial Svcs | Jul 06, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures were lower in the overnight trade as the U.S. - China tariffs kicked in, as the U.S. imposed levies on $34 billion of China's exports at midnight Thursday.

However, prices quickly recovered and traded higher on the stronger than expected U.S. headline nonfarm payrolls number.

Nonfarm payrolls increased a seasonally adjusted 213,000 in June when economists had expected 195,000 new jobs. The data was higher than the 177,000 positions that the ADP report indicated yesterday.

The unemployment rate rose to 4.0% from 3.8% in May. Economists had expected a 3.8% unemployment rate. 

There was some disappointment that average hourly earnings were up only .2% when a .3% increase had been anticipated. 

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 due to German economic data that fueled hopes that Europe's largest economy is beginning to shake off a weak beginning to the year. Industrial output soared 2.6% from April, according to the Economics Ministry. Economists had expected an increase of .1%. 

The British pound continued higher today after Bank of England Governor Mark Carney yesterday said the U.K. economy is supporting the case for higher interest rates. Financial futures markets are now predicting there is an 80% probability that the BoE will hike its key lending rate in August.

The Canadian dollar is higher on news that Canada added more jobs than expected in June and average hourly wages posted another strong increase. The Canadian economy added   31,800 jobs in June on a seasonally adjusted basis. Market expectations were for a gain in employment of 20,000. 

INTEREST RATE MARKET FUTURES

The minutes from the Federal Reserve's latest meeting, released yesterday, showed growing unease with how trade policies could potentially hold back business investment. The Fed said some businesses have already scaled back or dropped plans for new investments due to the uncertain global trade situation. 

Some flight to quality buying is coming into the market today in light of ongoing global trade tensions.    

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 82%, which compares to 80% yesterday.

Although flight to quality buying is likely to come in from time to time, the longer term trend for futures is lower.

SUPPORT AND RESISTANCE

September 18   S&P 500

Support    2728.00       Resistance    2750.00 

September 18   U.S. Dollar Index

Support    93.430         Resistance    94.330 

September 18   Euro Currency

Support    1.17320       Resistance    1.18390

September 18   Japanese Yen

Support    .90650         Resistance    .91110 

September 18   Canadian Dollar

Support    .76010         Resistance    .76590 

September 18   Australian Dollar

Support    .7365           Resistance    .7456 

September 18   Thirty Year Treasury Bonds

Support    145^0          Resistance    146^12 

August 18   Gold

Support    1250.0         Resistance    1265.0 

September 18   Copper

Support    2.7800         Resistance    2.8500 

August 18   Crude Oil

Support    72.01           Resistance    73.55


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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