US Dollar Partially Recovers

STOCK INDEX FUTURES

U.S. stock index futures are lower today but are on track for an up week.

Futures have been recently supported by mostly stronger than expected corporate earnings, along with optimism toward more economic stimulus.

As the corporate earnings season slowly winds down, investors have been encouraged by many companies’ results surpassing analysts’ expectations.

Approximately 72% of companies in the S&P 500 have reported earnings results so far and over 80% posted better than expected results, according to FactSet.

Also, there is more confidence about earnings growth as we go through earnings season.

The 9:00 central time February consumer sentiment index is expected to be 80.9.

Stock index futures continue to have upside momentum.

CURRENCY FUTURES

The U.S. dollar is higher but is still on track for losses on the week.

Traders are questioning how much any new economic stimulus might permanently increase the U.S. debt burden.

Longer term, lower prices are likely for the U.S. dollar.

Yesterday the European Commission lowered its GDP forecasts for 2021, saying it now anticipates the euro zone to grow 3.8% this year and the same in 2022. Early November estimates had shown predictions of a 4.2% expansion in 2021 and 3.0% growth in 2022.

Some analysts believe the slow euro zone economic recovery makes it more likely that the European Central Bank will increase the size of its quantitative easing program.

Longer term, higher prices are likely for the currency of the euro zone.

The British pound is steady, after economic data showed Britain’s GDP shrank 9.9% in 2020. However, the economy avoided heading back towards recession in the final quarter of the year, with GDP rising 1.0% in October to December, beating market forecasts of 0.5% growth.

INTEREST RATE MARKET FUTURES

Futures are firm at the front end of the yield curve and are lower at the long end of the curve.

Federal Reserve speakers today are John Williams at 9:00 and Mary Daly at 2:00.

In light of the Federal Reserve pledging not to hike its fed funds rate until possibly 2023, futures at the short end of the curve are likely to hold steady.

Futures at the long end of the yield curve will likely remain in a broad trading range, as the fundamentals are now mixed.

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