Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher today after sliding to multi-month lows on Friday with some traders saying markets overreacted to the miss on U.S. inflation.
The U.S. dollar has underperformed in the last two months as interest rate differential expectations have turned against the greenback.
Industrial production in the euro area advanced 0.9% from a month earlier in September 2022, following an upwardly revised 2.0% growth in August and beating market expectations of 0.3%.
Switzerland’s producer and import prices advanced 4.9% from a year earlier in October of 2022, slowing from a 5.4% gain in the previous month. This was the lowest producer and import price inflation since September 2021.
Bank of Japan Governor Haruhiko Kuroda said there are some signs of local inflation easing, which is a development that helps reduce pressure on the central bank to tighten its ultraloose monetary policy.
STOCK INDEX FUTURES
Stock index futures are lower after last week Federal Reserve Governor Christopher Waller said the central bank was not softening its fight against inflation, despite last week’s consumer price index report showing consumer prices increased less than expected in October.
Christopher Waller said investors overreacted to last week’s soft inflation data while warning that the U.S. central bank still has work to do before ending interest rate hikes.
This is a big week for quarterly results from big retailers.
The fundamentals and technicals for stock index futures are improving.
INTEREST RATE MARKET FUTURES
The technicals are looking more constructive for the interest rate market futures.
John Williams of the Federal Reserve will speak at 5:30 central time this afternoon.
According to financial futures markets currently, there is an 81.0% probability that the Federal Open Market Committee will increase its fed funds rate by 50 basis points at the December 14 meeting and a 19.0% probability that the rate will be hiked by 75 basis points.
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