By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures are sharply lower as the U.S.-China trade battle intensifies. Equity markets across Europe and Asia fell, as the Chinese yuan depreciated beyond the psychologically important 7-per-1 dollar level. China's central bank said the yuan's decline was a result of trade protectionism and higher tariffs placed on Chinese goods.
The 8:45 central time July PMI services index is expected to be 52.2 and the 9:00 July Institute for Supply Management survey is anticipated to be 55.5.
In the next few weeks there will be calls for easier credit conditions from the Federal Reserve, which will place a bottom on this market.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.
The Chinese yuan devaluation pressured the U.S. dollar index on the belief that there could be pressure from the Trump administration to lower the U.S. dollar. In addition, there will be ramped-up pressure on the Fed to cut interest rates.
The flight to quality currencies, the Swiss franc and the Japanese yen are higher.
The British pound firmed as a result of the upbeat U.K. Services PMI. The U.K. Services PMI for July came in at above expectations at 51.4 points, reflecting growth.
Futures are sharply higher due to flight to quality flows in light of the increased trade tensions between the U.S. and China.
The thirty year Treasury bond futures continued to advance today and are at their highest level since November 2016.
Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at its next meeting in September.
Federal Reserve Member of the Board of Governors Lael Brainard will speak at 12:30.
In the longer term, higher prices are likely for futures, especially at the long end of the curve, as most major central banks, including the Federal Reserve, are likely to embark on a new round of easier credit policies.
September 19 S&P 500
Support 2865.00 Resistance 2935.00
September 19 U.S. Dollar Index
Support 97.310 Resistance 97.960
September 19 Euro Currency
Support 1.11360 Resistance 1.12310
September 19 Japanese Yen
Support .94000 Resistance .94880
September 19 Canadian Dollar
Support .75510 Resistance .76000
September 19 Australian Dollar
Support .6750 Resistance .6816
September 19 Thirty Year Treasury Bonds
Support 158^16 Resistance 160^28
August 19 Gold
Support 1438.0 Resistance 1476.0
September 19 Copper
Support 2.5300 Resistance 2.5800
September 19 Crude Oil
Support 54.03 Resistance 55.55
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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