By Alan Bush | Senior Financial Economist at ADMIS
Stock index fell, as the number of coronavirus cases takes a surprise jump in China.
The U.S. consumer price index increased 0.1% last month, when a gain of 0.2% was expected and the consumer price index, excluding the often volatile food and energy categories, was up 0.2% as anticipated.
The number of Americans applying for first-time unemployment benefits advanced slightly last week, but remained at historically low levels. Initial jobless claims increased 2,000 in the week ended February 8 to 205,000. Economists expected 210,000 new jobless claims.
In spite of lower prices today, my outlook remains unchanged in that stock index futures will end up higher in the first quarter.
The U.S. dollar is lower today. However, recent gains to four month highs was 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. In the longer term, higher prices are likely for the U.S. dollar, which remains my minority opinion.
The euro currency is lower after a report showed German consumer prices fell in January, which was in line with forecasts. The consumer price index decreased 0.6% compared with December and increased 1.7% compared with the same month a year ago.
Flight to quality buying is coming into the Japanese yen.
Flight to quality longs are being reestablished due to the increase in coronavirus concerns.
Federal Reserve speakers today are Robert Kaplan at 11:45 and John Williams at 4:30.
The Treasury will auction 30 year bonds today.
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 69% probability that the Federal Open Market Committee will lower its fed funds rate at its September 16, 2020 policy meeting. Yesterday the probability was 66%.
March 20 S&P 500
Support 3346.00 Resistance 3383.00
March 20 U.S. Dollar Index
Support 98.700 Resistance 98.950
March 20 Euro Currency
Support 1.08600 Resistance 1.09120
March 20 Japanese Yen
Support .90790 Resistance .91400
March 20 Canadian Dollar
Support .75280 Resistance .75550
March 20 Australian Dollar
Support .6704 Resistance .6748
March 20 Thirty Year Treasury Bonds
Support 161^16 Resistance 162^30
April 20 Gold
Support 1568.0 Resistance 1584.0
March 20 Crude Oil
Support 50.45 Resistance 51.98
March 20 Copper
Support 2.5800 Resistance 2.6250
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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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