Written Commentary
CURRENCY FUTURES
The U.S. dollar index declined in the overnight trade, and there was additional pressure when the personal consumption expenditures report was released.
The annual inflation rate in the euro area increased for the first time in five months to 2.6% in May 2024 from 2.4% in each of the previous two months. This was above predictions of 2.5%. Core inflation, which excludes energy and food, increased to 2.9%, surpassing the estimated 2.7%.
In spite of these elevated inflation numbers, the European Central Bank is still expected to cut interest rates on June 6, which would be the first reduction since 2019. However, economists are reducing their expectations of how many additional rate cuts are likely this year.
The Nationwide House Price Index in the U.K. increased by 1.3% year-on-year in May 2024, accelerating from a 0.6% increase that was reported in the previous period.
Japan’s Ministry of Finance stated that Japan spent 9.7885 trillion yen ($62.25 billion) on currency intervention between April 26 and May 29, after the Japanese yen plunged to a 34-year-low in April.
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade but quickly firmed when the U.S. personal income report was released.
Personal income in April increased 0.3% as expected. However, personal consumption expenditures In April increased only 0.2% when a gain of 0.3% was anticipated.
The 8:45 central time May Chicago PMI is estimated to be 40.8.
The longer term fundamentals and technicals remain supportive.
INTEREST RATE MARKET FUTURES
Futures quickly advanced when the weaker than expected personal consumption expenditures report was released.
Raphael Bostic of the Federal Reserve will speak at 5:15 this afternoon.
Financial futures markets are predicting there is a 51% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
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.
© 2021 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.
