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FOMC Meeting Today and Tomorrow

by AFS Archer Financial Svcs | Jan 29, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures are higher ahead of the U.S.-China trade talks.  

The 9:00 central time January consumer confidence index is expected to be 124.3.      

The Federal Reserve’s Open Market Committee meets on this morning through Wednesday at midday, with a statement on monetary policy tomorrow afternoon. No change in monetary policy is expected.

Traders will focus on Federal Reserve Chairman Jerome Powell's press conference. Federal Reserve officials recently indicated they will be data dependent and patient in raising interest rates. 

Stock index futures and many industrial commodities have been preforming very well lately and at a time when this would normally not be expected. Could it be that financial and commodity futures markets are anticipating a resolution to the U.S.-China trade dispute will come sooner rather than later? I believe this may be the case. If this assumption is correct, we could expect higher prices for stock index futures and also for industrial commodities, such as copper and crude oil.

CURRENCY FUTURES

Currency traders are focusing on the two-day Federal Open Market Committee meeting when policymakers are expected to signal a pause in their tightening cycle and acknowledge potential growing risks to the economy.

The euro currency hit a two week high before settling back. 

The British pound firmed on building expectations that the U.K. will be able to exit from the European Union with some form of a deal. 

The U.K. is scheduled to leave the E.U. on March 29.

The Australian dollar is only slightly lower on news that Australian business conditions deteriorated sharply late last year and are now the weakest since late 2014.

INTEREST RATE MARKET FUTURES 

The Treasury will auction seven year notes today.

Financial futures markets are predicting a 74% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year.

There is a 23% chance of an increase in the fed funds rate by 25 basis points, and there is a 3% probability of a 25 basis point rate cut in 2019.

I expect futures to drift lower over the near term.

SUPPORT AND RESISTANCE

March 19 S&P 500

Support    2624.00      Resistance    2655.00

March 19 U.S. Dollar Index

Support    95.210        Resistance    95.590 

March 19 Euro Currency

Support    1.14550      Resistance    1.14990

March 19 Japanese Yen

Support    .91550        Resistance    .91990

March 19 Canadian Dollar

Support    .75320        Resistance    .75660 

March 19 Australian Dollar

Support    .7137          Resistance    .7190 

March 19 Thirty Year Treasury Bonds

Support    144^28       Resistance    145^12 

February 19 Gold

Support    1300.0        Resistance    1312.0 

March 19 Copper

Support    2.6750        Resistance    2.7300 

March 19 Crude Oil

Support    51.67          Resistance    53.71


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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