CURRENCY FUTURES
The U.S. dollar index came under pressure when the U.S. July producer price index report was released.
The U.S. dollar will probably trend lower in light of indications of a slowing U.S. economy.
The ZEW Indicator of Economic Sentiment for the euro area continued to decline in August, dropping 25.8 points to a nine-month low of 17.9, which was well under forecasts of 35.4.
The ZEW Indicator of Economic Sentiment for Germany fell to 19.2 in August 2024 from 41.8 in July, which was the lowest in seven months and well under market expectations of 32.
Australia’s NAB business confidence index declined to 1 in July from a downwardly revised 3 in June, which was the highest number since January 2023.
STOCK INDEX FUTURES
Stock index futures advanced when the producer price index report was released.
The July producer price index increased 0.1% when up 0.2% was expected, and on an annualized basis the producer price index was up 2.2%, which compares to the anticipated 2.6% advance. The producer price index excluding food and energy was unchanged when a gain of 0.2% was forecast, and on an annualized basis the producer price index excluding food and energy increased 2.4% when up 3.0% was estimated.
Currently the bearish influence of prospects of a recessionary environment are being offset by expectations that the Federal Reserve will pivot to accommodation in September.
INTEREST RATE MARKET FUTURES
Futures were mixed to lower in the overnight trade. However, prices quickly advanced when the bullish producer price index report was released.
Raphael Bostic of the Federal Reserve will speak at 12:15 central time.
There is now a 46% probability that the Federal Open Market Committee will lower its that funds rate by 25 basis points at its September 18 meeting, and there is a 54% probability that the FOMC will reduce its key rate by 50 basis points in September.
Higher prices are likely for the interest rate market futures.
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