By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures are lower, as traders assess the potential economic implications of the coronavirus outbreak.
Later today, the White House will release its economic projections, including an updated growth forecast, along with a proposed budget for the fiscal year.
In spite of the negative impact of the coronavirus and lower prices today, I anticipate U.S. stock index futures will end up higher in the first quarter.
The U.S. dollar advanced to a four month high in the overnight trade. Recent strength in the greenback is linked to the belief that the Federal Reserve will be less aggressive in adding more accommodation to the banking system than other major central banks.
The Canadian dollar is lower in spite of news that housing starts in Canada in January were 213,000 when 205,000 were expected.
Also, building permits in Canada in December increased 7.4% from November when up 2.8% was anticipated.
China's consumer inflation hit its highest level in over eight years in January due to the impact from the coronavirus outbreak and the Lunar New Year. The consumer price index climbed 5.4% in January from a year earlier, which is the highest level since October 2011, when the index grew 5.5%.
Futures are higher, as Treasury yields turn lower, as the coronavirus remains in focus and as analysts question whether supply chains and factories in China will reopen soon.
Federal Reserve governor Michelle Bowman today said the current setting of the central bank's monetary policy should help the U.S. economy continue to grow. “The national economic backdrop looks very favorable, which should be broadly supportive of your local economies.”
Patrick Harker of the Fed will speak at 2:15 central time.
Federal Reserve Chairman Powell will testify before Congress tomorrow and Wednesday.
In light of the negative impact of the coronavirus on global economic growth, major central banks will come under pressure to add more accommodation.
Based on financial futures markets, currently there is a 71% probability that the Federal Open Market Committee will lower its fed funds rate at its September 16, 2020 policy meeting.
March 20 S&P 500
Support 3300.00 Resistance 3337.00
March 20 U.S. Dollar Index
Support 98.420 Resistance 98.690
March 20 Euro Currency
Support 1.10944 Resistance 1.10977
March 20 Japanese Yen
Support .9110 Resistance .91500
March 20 Canadian Dollar
Support .75000 Resistance .75330
March 20 Australian Dollar
Support .6665 Resistance .6718
March 20 Thirty Year Treasury Bonds
Support 162^4 Resistance 163^16
April 20 Gold
Support 1569.0 Resistance 1584.0
March 20 Crude Oil
Support 49.44 Resistance 50.55
March 20 Copper
Support 2.5400 Resistance 2.5800
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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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