Dollar Lower, Euro Currency Higher

CURRENCY FUTURES

The U.S. dollar index is lower, and the euro currency is higher, which partially reverses the sharp price moves made yesterday.

Euros and dollars

French data added to recent evidence of easing price pressures in the euro zone after Germany’s inflation fell for a second month in a row in December, and following lower Spanish inflation figures released last week.

The inflation rate in France fell to 6.7% in December, which was down from 7.1% in November and below the average forecast for 7.2%.

A lower inflation rate in the euro zone puts pressure on the European Central Bank to be less hawkish.

Approvals for house purchases in the U.K. dropped sharply to 46,100 in November, which is well market expectations of 55,000.

STOCK INDEX FUTURES

Stock index futures are higher.

Mortgage applications declined 10.3% in the week ended December 30 from two weeks earlier, which is the biggest decline in three months.

The 9:00 central time December Institute for Management manufacturing PMI is expected to be 48.1.

The 9:00 November Job Openings and Labor Turnover Survey (JOLTS) is anticipated to be 10.1 million. In October it was 10.334 million.

The main event today is the 1:00 release of the minutes from the December 14 Federal Open Market Committee meeting.

There is a seasonal tendency for the last five days of a calendar year and the first two trading days of the new year for stock index futures to trade higher. If this seasonal works it would mark the seventh one in a row.

INTEREST RATE MARKET FUTURES

Futures are higher across the board today.

There is a triple top in the March fed funds futures at 95.3150, which will probably be taken out on the upside.

Some analysts are pointing out that the Federal Reserve is shrinking its balance sheet more slowly than the planned pace, which suggests a less hawkish Fed.

According to financial futures markets currently, there is a 72.0% probability that the Federal Open Market Committee will increase its fed funds rate by 25 basis points at the February 1  policy meeting and a 28.0% probability that the rate will be hiked by 50 basis points.

 

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