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Massive New Stimulus from ECB

by Archer Financial Services | Mar 19, 2020

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

There were temporary gains in the overnight trade when the European Central Bank announced on Wednesday night an extraordinary 750 billion euro ($818.7 billion) asset-buying program to help the euro zone fight the consequences of the coronavirus outbreak.
Christine Lagarde, the president of the European Central Bank said, “Extraordinary times require extraordinary action. There are no limits to our commitment to the euro.”
U.S. President Donald Trump has plans for a $1.3 trillion economic rescue package that would add to measures unveiled by several other countries including Canada, the U.K., France and Australia.
Jobless claims in the week ended March 14 were 281,000 when 211,000 were expected.
The 9:00 February leading indicators report is expected to show a 0.1% decline.
The most important metric now to watch is the number of new coronavirus cases. Hopefully those numbers will plateau and trend lower soon.

CURRENCY FUTURES

The U.S. dollar index is sharply higher and is at its highest level since January 2017, as international demand for U.S. dollars surges.
In addition, there is the belief that the U.S. economy will hold up better than elsewhere in the world.
It seems that the U.S. dollar is the only flight to quality vehicle that has consistently performed as it should in recent days.
A variety of currencies hit multi-year lows against the U.S. dollar, including the British pound, the Australian dollar and the New Zealand dollar.
The euro currency is lower after a report showed German manufacturers saw their largest drop in confidence in 70 years.  A measure of business expectations slumped to 82.0 from 93.2 in February. The overall index of confidence, which includes an assessment of the current situation, fell to its lowest level since August 2009.  
The Reserve Bank of Australia today cut interest rates for a second time this month and said it will deploy unconventional policy measures, as the coronavirus pandemic threatens to pull the country into its first recession since the early 1990s.
The RBA cut the official cash rate by 25 basis points to a record low of 25 basis points from 50 basis points. RBA Governor Philip Lowe said the central bank will also set price targets in the bond market in an attempt to put further downward pressure on yields.  

INTEREST RATE MARKET FUTURES

Traders are becoming more selective in which flight to quality vehicles to seek safety. Although the 30 year Treasury bond futures are higher today, they are well off the highs that were registered on March 9.
In recent weeks the front end of the yield curve has become less inverted and is flattish now, which is an encouraging sign for the possibility of at least some economic recovery late this year and into 2021.
 

SUPPORT AND RESISTANCE

June 20 S&P 500
Support    2270.00      Resistance    2465.00
June 20 U.S. Dollar Index
Support    101.020      Resistance   102. 950
June 20 Euro Currency
Support    1.07750      Resistance    1.10400
June 20 Japanese Yen
Support    .91370        Resistance    .93120
June 20 Canadian Dollar
Support    .68140        Resistance    .69400
June 20 Australian Dollar
Support    .5500          Resistance    .5849
June 20 Thirty Year Treasury Bonds
Support    167^24       Resistance     173^8
June 20 Gold
Support    1460.0        Resistance     1510.0
May 20 Crude Oil
Support    21.68          Resistance     24.55
May 20 Copper
Support   1.9700         Resistance     2.2000



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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