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No Policy Change Likely Today at FOMC Meeting

by Archer Financial Services | Nov 08, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures soared yesterday, which was the strongest post-midterm election rally since 1982. 

Initial jobless claims decreased 1,000 to 214,000 in the week ended November 3. Economists expected 210,000 new claims last week.

The Federal Open Market Committee will conclude its two day policy meeting today.

History has shown that U.S. equity markets after the midterm elections have a tendency to advance through year end and also into the following year. In addition, the third year of a presidential term is historically the strongest year for stock index futures.

In addition to the bullish historical tendencies for stock index futures after the midterm elections, there is the still relatively low interest rate environment that will provide long term underlying support.

 

CURRENCY FUTURES

The euro currency is lower after the European Union said the euro zone economy will cool this year and in the coming years, as global demand for the bloc's exports slow.

In addition, the euro was pressured after the European Commission cut its forecasts for Italian growth, citing investor concerns about the euro zone's third largest member's debts and economic outlook.

The Canadian dollar is lower on news that the Canadian housing starts trend decreased in October.

 

INTEREST RATE MARKET FUTURES

Today is the second day of the two day Federal Open Market Committee meeting.

Despite strong economic growth and the rise in average hourly earnings, the probability of a fed funds rate hike at the conclusion of today’s meeting is 7%. The FOMC is expected to hold its federal funds target range at a range between 2.00% and 2.25%.

According to the financial futures markets, the probability of a fed funds rate hike at the Federal Open Market Committee’s December 19 policy meeting is 81%, which compares to 80% yesterday.

 

SUPPORT AND RESISTANCE

December 18   S&P 500

Support    2795.00      Resistance    2823.00

 

December 18   U.S. Dollar Index

Support    95.810        Resistance    96.270

 

December 18   Euro Currency

Support    1.14270      Resistance    1.14880

 

December 18   Japanese Yen

Support    .88030        Resistance    .88470

 

December 18   Canadian Dollar

Support    .76010        Resistance    .76590

 

December 18   Australian Dollar

Support    .7258          Resistance    .7314

 

December 18   Thirty Year Treasury Bonds

Support    136^24       Resistance    138^0

 

December 18   Gold

Support    1218.0        Resistance    1232.0

 

December 18   Copper

Support    2.7000        Resistance    2.7550

 

December 18   Crude Oil

Support    61.03          Resistance    62.68


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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