Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
CURRENCY FUTURES
The U.S. dollar index is higher. Some of the strength is due to flight to quality buying in light of developments in the Middle East, and some of the support is because of ongoing favorable interest rate differentials.
The greenback remains in a 10-day congestion pattern.
The fundamentals and technicals remain supportive to the U.S dollar.
There is growing speculation that the European Central Bank will lower interest rates sooner rather than later. Over the weekend ECB official Francois Villeroy de Galhau signaled that policy makers could lower borrowing costs at any time this year and all options are open at upcoming policy meetings. Analysts are now predicting the ECB could reduce its key interest rate by 25 basis points as early as April.
The Bank of England is expected to leave interest rates unchanged at 5.25% at its policy meeting on Thursday.
STOCK INDEX FUTURES
Stock index futures are mixed.
The January Dallas Federal Reserve manufacturing survey will be released at 9:30 central time. The survey last month was -9.3.
The fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are mostly higher, especially at the long end of the curve, as flight to safety is supporting futures.
There are no Federal Reserve speakers today, which is in keeping with the Federal Reserve’s “blackout period” in advance of a Federal Open Market Committee meeting.
Financial futures markets are predicting there is a 2.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the January 31 policy meeting, and there is a 98% probability that the Fed will keep rates unchanged.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2024 ADM Investor Services International Limited.
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.
