By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures are higher due to reports that there is a slowdown in the number of new coronavirus cases in China. Today China reported its lowest number of new coronavirus cases since January.
Federal Reserve Chairman Jerome Powell returns to Capitol Hill this morning for a second day of testimony on the economy, monetary policy and financial regulation. Today he will testify before the Senate Banking Committee. Mr. Powell will deliver the same prepared remarks he gave Tuesday to the House Financial Services Committee.
My outlook remains unchanged in that stock index futures will end up higher in the first quarter.
The U.S. dollar is higher. 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. Additional gains are likely for the U.S. dollar, which remains my minority opinion.
The euro currency is lower after a report showed December industrial output in the euro zone fell 2.1% on the month when a decline of 1.6% was expected.
The Canadian dollar and the Australian dollar are higher, as a result of firming crude oil prices.
Flight to quality longs are being liquidated due to easing coronavirus concerns.
Philadelphia Federal Reserve Bank President Patrick Harker today said the U.S. economy is in good shape and the growth rate is expected to return to the trend of about 2.0% in 2020.
Mr. Harker said, "Friday’s employment report showed the labor market began 2020 on the same positive trend it showed through 2019."
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 66% probability that the Federal Open Market Committee will lower its fed funds rate at its September 16, 2020 policy meeting. Yesterday the probability was 68%.
March 20 S&P 500
Support 3353.00 Resistance 3381.00
March 20 U.S. Dollar Index
Support 98.550 Resistance 98.820
March 20 Euro Currency
Support 1.09140 Resistance 1.09480
March 20 Japanese Yen
Support .90770 Resistance .91300
March 20 Canadian Dollar
Support .75160 Resistance .75500
March 20 Australian Dollar
Support .6711 Resistance .6760
March 20 Thirty Year Treasury Bonds
Support 161^12 Resistance 162^12
April 20 Gold
Support 1562.0 Resistance 1577.0
March 20 Crude Oil
Support 49.85 Resistance 51.95
March 20 Copper
Support 2.5800 Resistance 2.6150
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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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The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.