By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures advanced yesterday after the Federal Reserve signaled interest rate increases were on hold. The Federal Open Market Committee voted unanimously to keep its federal funds rate unchanged at a range between 2.25% and 2.50%, as expected. The statement removed the outlook for “further gradual increases” in interest rates and the FOMC “will be patient” in deciding on future interest rate changes.
Federal Reserve Chairman Jerome Powell yesterday said "the case for raising rates has weakened somewhat."
High level U.S.-China trade talks are taking place today in Washington, D.C, which are aimed at resolving differences over China’s intellectual property policies.
President Trump ruled out the possibility that a deal could be announced by the end of this week, although the president said that while the negotiations are going very well, no final agreement will be made until he meets with Chinese President Xi Jingping.
Initial jobless claims increased 53,000 to 253,000 in the week ended January 26. Economists expected 215,000 new claims last week.
The 8:45 central time January Chicago PMI is expected to be 62.5 and the 9:00 November new home sales report is anticipated to be 560,000.
Stock index futures and many industrial commodities have been performing better than the news would suggest, which should be viewed as a sign of strength.
The U.S. dollar index fell hard yesterday in response to the dovish policy statement from the FOMC.
The euro currency fell on news that GDP growth in 2018 in the euro zone was 1.8% versus 2.4% in 2017, although GDP growth in the fourth quarter was up a little from the third quarter.
The Canadian dollar is lower on news that the Canadian economy contracted .1% in November, matching market expectations.
The Canadian dollar and the Australian dollar should trend higher in the weeks to come, as industrial commodity prices are likely to increase in price.
INTEREST RATE MARKET FUTURES
Futures firmed due to yesterday’s dovish statement from the FOMC.
Financial futures markets are predicting an 86% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year.
There is a 4% chance of an increase in the fed funds rate by 25 basis points, and there is a 10% probability of a 25 basis point rate cut in 2019.
Now that the FOMC statement is out of the way, futures will probably drift lower, as optimism for a U.S.-China trade deal is likely to increase.
SUPPORT AND RESISTANCE
March 19 S&P 500
Support 2670.00 Resistance 2694.00
March 19 U.S. Dollar Index
Support 94.800 Resistance 95.140
March 19 Euro Currency
Support 1.15070 Resistance 1.15660
March 19 Japanese Yen
Support .91960 Resistance .92550
March 19 Canadian Dollar
Support .76010 Resistance .76400
March 19 Australian Dollar
Support .7241 Resistance .7295
March 19 Thirty Year Treasury Bonds
Support 145^20 Resistance 146^20
April 19 Gold
Support 1319.0 Resistance 1335.0
March 19 Copper
Support 2.7600 Resistance 2.8050
March 19 Crude Oil
Support 53.77 Resistance 55.21
For more information about these markets, please contact Alan at 312.242.7911 or via email at firstname.lastname@example.org. 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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