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U.S. Dollar Likely to Firm

by Archer Financial Services | May 08, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures fell as the U.S.-China trade dispute remains in focus.

There was confirmation yesterday that the Trump administration will increase tariffs on $200 billion of Chinese goods to 25% from 10% on Friday. In spite of this  China’s Vice Premier Liu He will lead a delegation for ongoing trade talks in Washington on Thursday and Friday with the possibility that an agreement still could be worked out.

The tariff increase will go into effect at 12:01 a.m. on Friday, according to U.S. Trade Representative Robert Lighthizer. Treasury Secretary Steven Mnuchin said the U.S. would reconsider the duties if the trade talks get back on track.

My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks are coming and will be the dominant fundamental that supports stock index futures in the long term.

 

CURRENCY FUTURES

The euro currency is higher on news that German industrial output increased 0.5% in March compared to the previous month. Economists forecast a 0.5% decline.  

The U.S. dollar is lower, but is likely to trade higher from current levels, as interest rate differential expectations remain bullish for the greenback.

The British pound declined, as Brexit talks have resulted in little progress and pressure is mounting on U.K. Prime Minister Theresa May to step down from her position.

Safe haven currencies, including the Japanese yen and the Swiss franc advanced in light of the ongoing uncertainties of the U.S.-China trade dispute.

The Canadian dollar is higher due to better crude oil prices.

 

INTEREST RATE MARKET FUTURES

The Treasury will auction 10 year notes today.

Financial futures are predicting there is a 59% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points, or more at its December 11 policy meeting. 

The probability was 58% yesterday.

 

SUPPORT AND RESISTANCE

June 19 S&P 500

Support    2864.00      Resistance    2903.00

June 19 U.S. Dollar Index

Support    97.060        Resistance    97.110

June 19 Euro Currency

Support    1.12190      Resistance    1.12550

June 19 Japanese Yen

Support    .90920        Resistance    .91350

June 19 Canadian Dollar

Support    .74140        Resistance    .74550

June 19 Australian Dollar

Support    .6997          Resistance    .7045

June 19 Thirty Year Treasury Bonds

Support    148^10       Resistance     149^12

June 19 Gold

Support    1282.0        Resistance     1296.0

July 19 Copper

Support    2.7550        Resistance     2.8150

June 19 Crude Oil

Support    61.03          Resistance     62.33


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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