Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher but has underperformed the news in recent weeks.
The euro currency is lower on news that the euro zone composite PMI fell to 47.1 when economists had expected 47.6.
The euro is weaker despite the belief that the European Central Bank at its policy meeting on October 27 will hike its key lending rate by 75 basis points.
The S&P Global/CIPS U.K. composite PMI fell to 47.2 in October of 2022 from 49.1 in September, which is well below expectations of 48.1 and marking the steepest decline in 21 months.
The Japanese government intervened late Friday to prop up the Japanese yen after it fell to its lowest level against the U.S. dollar since 1990.
There were reports that the BoJ intervened again today to the support yen.
The rule of thumb is that intervention in currency markets usually only has a temporary impact unless there is an accompanying change in central bank policies.
STOCK INDEX FUTURES
Stock index futures are higher, building on the momentum from last week’s gains as investors reassessed the outlook for monetary policy, while awaiting another round of corporate earnings reports.
Gains late last week were linked to comments from Federal Reserve officials that hinted officials are concerned about overtightening. San Francisco Fed President Mary Daly was among those who have this view, saying the central bank should start discussing the potential of a smaller rate hike in December.
The September Chicago Federal Reserve national activity index was 0.10 as expected.
The 8:45 central time October Chicago manufacturing index is anticipated to be 51.2 and the service index is predicted to be 49.3.
Futures are trading at the highest level since October 13.
INTEREST RATE MARKET FUTURES
There are no major Federal Reserve speakers scheduled for today.
According to financial futures markets currently, there is a 94.0% probability that the Federal Open Market Committee will increase its fed funds rate by 75 basis points at the November 2 policy meeting and a 6.0% probability that the rate will be hiked by 50 basis points.
Interested in more futures markets? Explore our Market Dashboards here.
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 information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. 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.
