US Dollar Higher After Six Days of Declines
STOCK INDEX FUTURES
U.S. stock index futures are mixed, caught between the bullish vaccine optimism and disagreement between the Treasury Department and the Federal Reserve over the continuation of funding for some of the emergency programs implemented during the recession.
The U.S. has no scheduled economic data for today.
Overall, stock index futures are performing well on the news.
The U.S. dollar is higher today after declining for six consecutive days.
Longer term, the U.S. dollar is likely to drift lower due to expectations for an extended period of low interest rates and concerns over rising U.S. levels of debt.
Germany’s producer prices decreased by 0.7% year-on-year in October 2020, which is the ninth consecutive month of decline and in line with market forecasts. This was the smallest drop since February.
European Union leaders made no progress toward resolving a dispute to unlock a €1.8 trillion budget economic recovery package.
The British pound is higher due to upbeat retail sales data. Retail sales in the U.K. increased 1.2% month-over-month in October of 2020, beating market forecasts of unchanged. It is the sixth consecutive month of rising retail sales.
The Japanese yen is lower after a report showed consumer prices declined 0.4% in October year-on-year, which is the sharpest decline in over four years.
The Australian dollar is higher after a report showed retail sales in Australia increased by 1.6% month-over-month in October and beat the market consensus of a 0.3% advance and posting the first increase since July.
INTEREST RATE MARKET FUTURES
Robert Kaplan of the Federal Reserve will speak at 8:30
Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at the December 16 policy meeting.
The December 30-year Treasury bond futures are getting close to major resistance at a downtrend line that comes in at 174^26, which is likely to hold.
In the months ahead the yield curve is likely to steepen, which should put pressure on futures at the long end of the curve, especially the 30-year Treasury bond futures, while futures at the short end of the curve are likely to hold steady.
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