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.
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
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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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The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.