Written Commentary
Ag Market View for Dec 13.24
December 13, 2024
CURRENCY FUTURES
The U.S. dollar index was a little lower in the overnight trade and came under additional pressure when the U.S. October consumer price index report was released. The greenback is likely to at least partially recover from this morning’s selling pressure.
The fundamentals and technicals remain supportive to the U.S. dollar.
There are expectations that the European Central Bank will lower its key interest rates more aggressively than the Federal Reserve, putting pressure on the common currency.
The European Central Bank is expected to implement a 25 basis point interest rate cut at its December 12 policy meeting.
Japan’s wholesale inflation accelerated in October at the fastest annual pace in over a year, complicating the central bank’s decision on how soon to increase interest rates.
The Bank of Japan said its corporate goods price index, which measures the price that companies charge each other for goods and services, increased 3.4% in October from a year earlier, which is above market forecasts for a 3.0% gain.
Australia’s seasonally adjusted wage price index advanced by 3.5% year-over-year in the third quarter of 2024, easing from 4.1% growth in the previous quarter and falling short of forecasts for a 3.6% gain.
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade but quickly advanced when the U.S. October consumer price index report was released even though this report came in as expected.
Traders are relieved that the consumer price index report did not show a larger increase.
The October consumer price index increased 0.2%, which was as anticipated, and on an annualized basis was up 2.6% as estimated. The October consumer price index excluding food and energy was up 0.3% when a gain of 0.3% was forecast and on an annualized basis increased 3.3% as expected.
The fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures advanced across the board when the U.S. October consumer price index report was released. The longs were encouraged when the October consumer price index report did not show a larger than anticipated increase.
Minneapolis Federal Reserve Bank President Neel Kashkari made comments yesterday that were slightly less dovish than expected, although he did not rule out another interest rate cut at the December Federal Open Market Committee policy meeting.
Currently there is a 79% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its December 18 policy meeting, and there is a 21% chance that the FOMC will keep its key rate unchanged at 4.50% – 4.75%.
Federal Reserve speakers today are Lorie Logan at 8:45, Alberto Musalem at 12:00 and Jeffrey Schmid at 12:30.
Federal Reserve Chair Jerome Powell will speak tomorrow at 2:00 PM.
It is likely that the FOMC will be slower to add accommodation in 2025 than the consensus view.
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