Written Commentary
CURRENCY FUTURES
The U.S. dollar index is lower and remains near the lowest level since late June due to prospects of a less aggressive tightening from the Federal Reserve.
Interest rate differential expectations are long-term bearish for the greenback and lower prices are likely.
The euro currency is higher on news that German factory orders increased 0.8% in October from September when a gain of 0.1% was anticipated. September’s figures were revised higher to show a drop of only 2.9%, rather than the 4.0% originally reported.
The S&P Global/CIPS U.K. construction PMI fell to a three-month low of 50.4 from 53.2 in October. Economists estimated a reading of 52.0.
Japan’s household spending in October increased 1.2% in real term from a year earlier, increasing for the fifth consecutive month.
The Bank of Canada will likely hike its key interest rate by 25 or 50 basis points at the conclusion of its policy meeting tomorrow.
The Reserve Bank of Australia raised the cash rate by 25 basis points to 3.1% at its final meeting of 2022, matching market forecasts. This move marked the eighth straight rate hike, taking borrowing costs to a level not seen since November 2012.
STOCK INDEX FUTURES
The U.S. trade deficit in October was $78.2 when a deficit of $80.0 billion was expected. This compares with a $73.3 billion deficit in September.
The fundamentals and technicals for stock index futures remain supportive.
INTEREST RATE MARKET FUTURES
There are no Federal Reserve speakers today with the Fed’s self-imposed blackout period in force ahead of next week’s Federal Open Market Committee meeting.
According to financial futures markets currently, there is an 80.0% probability that the Federal Open Market Committee will increase its fed funds rate by 50 basis points at the December 14 policy meeting and a 20.0% probability that the rate will be hiked by 75 basis points.
The fundamental and technical aspects have turned more supportive for futures.
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