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Weak Economic News from Europe

by Archer Financial Services | Feb 07, 2019

By Alan Bush | Senior Financial Economist at ADMIS   
 

STOCK INDEX FUTURES

U.S. stock futures declined due to weak economic news from Europe.

However, hopes that the U.S. and China might be able to reach a trade deal limited the selling pressure.         

U.S. and Chinese officials will start another round of trade talks in Beijing next week. The U.S. delegation is scheduled to begin arriving in Beijing over the weekend.

Initial jobless claims declined 19,000 to 234,000 in the week ended February 2, which was higher than the 225,000 median estimate. 

The 2:00 central time December consumer credit report is expected to show a $17.5 billion increase.

In spite of lower prices today, stock index futures have been performing better than the news would suggest since the lows were made in late December.

 

CURRENCY FUTURES

The U.S. dollar again advanced by default due to weaker economic data overseas.

The euro currency is lower as a result of more downbeat economic news coming out of the European Union.

The European Commission cut its growth forecast for the euro zone to 1.3% in 2019, which is substantially below a 1.9% growth rate that was forecast in November. The report partially blamed the U.S.-China trade war for the slower growth rate. In addition, the report lowered euro zone inflation expectations to 1.4% in 2019 and 1.5% in 2020.

Industrial output in Germany in December was down 0.4% from November when an increase of 0.8% was expected.

The Bank of England left its key bank rate unchanged at 0.75%, as expected, at its policy meeting today.

The British pound fell to a two-week low after the Bank of England cut its growth forecast for the U.K. economy. However, there was recovery when the BoE said it still expects to hike interest rates in coming years in spite of a weaker growth outlook for the global and U.K. economies.  

 

INTEREST RATE MARKET FUTURES

The Treasury will auction 30 year bonds today.

At 6:30 this evening St. Louis Federal Reserve Bank President James Bullard will deliver a presentation on the U.S. economy and monetary policy.

Financial futures markets are predicting a 96% 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 in 2019.

The thirty year Treasury bond futures have remained in a broad trading range since the first week in January. A U.S.-China trade agreement, or hint of one, would be the catalyst to take futures lower.

 

SUPPORT AND RESISTANCE

March 19 S&P 500

Support    2703.00      Resistance    2733.00

 

March 19 U.S. Dollar Index

Support    96.030        Resistance    96.550

 

March 19 Euro Currency

Support    1.13530      Resistance    1.14110

 

March 19 Japanese Yen

Support    .91080        Resistance    .91610

 

March 19 Canadian Dollar

Support    .75310        Resistance    .75870

 

March 19 Australian Dollar

Support    .7093          Resistance    .7133

 

March 19 Thirty Year Treasury Bonds

Support    145^18       Resistance    146^16

 

April 19 Gold

Support    1302.0        Resistance    1319.0

 

March 19 Copper

Support    2.8150        Resistance    2.8550

 

March 19 Crude Oil

Support    52.93          Resistance    54.27


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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