By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures were sharply lower in the overnight trade after the U.S. Treasury unexpectedly named China a currency manipulator. This is viewed as an escalation of the trade war.
However, stock index futures rebounded and are now higher after the People’s Bank of China issued a statement claiming that it is not a currency manipulator and told foreign companies that the yuan will not keep falling.
At 9:00 central time the Labor Department will release its Job Openings and Labor Turnover Survey (JOLTS), which tracks monthly changes in job openings and offers rates on hiring and quits. The median estimate is 7.293 million.
Over 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.
After a sharp decline in the U.S. dollar yesterday, the greenback is higher today.
The euro currency is a little lower in spite of news that German manufacturing orders picked up more than expected in June. Manufacturing orders increased 2.5% on the month when economists had expected an increase of 0.3%.
The Australian dollar is higher after the Reserve Bank of Australia took a break from lowering interest rates at today’s policy meeting. The RBA left its official cash rate at a record low 1.0%. However, the RBA left the door open to expanding on the cuts it made in June and July.
Yesterday the thirty year Treasury bond futures advanced to their highest level since November 2016. There is some long liquidation today after the PBOC said it is not a currency manipulator.
There will be increased pressure on the Federal Reserve to ease credit conditions with, according to the U.S. Treasury, China being a currencymanipulator.
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 on September 18.
The Treasury will auction three year notes today.
St. Louis Federal Reserve Bank President James Bullard will speak about the U.S. economy and monetary policy at 12:05.
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 2772.00 Resistance 2875.00
September 19 U.S. Dollar Index
Support 96.920 Resistance 97.570
September 19 Euro Currency
Support 1.12020 Resistance 1.12940
September 19 Japanese Yen
Support .93600 Resistance .95080
September 19 Canadian Dollar
Support .75530 Resistance .75960
September 19 Australian Dollar
Support .6753 Resistance .6816
September 19 Thirty Year Treasury Bonds
Support 160^0 Resistance 162^0
October 19 Gold
Support 1460.0 Resistance 1483.0
September 19 Copper
Support 2.5300 Resistance 2.5700
September 19 Crude Oil
Support 53.65 Resistance 55.55
For more information about these markets, please contact Alan at 312.242.7911 or via email at email@example.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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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.