Written Commentary
Ag Market View for May 20.25
May 20, 2025
CURRENCY FUTURES
The March U.S. dollar index is higher, recovering some losses from the previous session as investors continued to assess the outlook for Federal Reserve monetary policy in light of shifting trade policies.
In a speech on Wednesday, Federal Reserve Chair Jerome Powell signaled that the Federal Reserve is in no rush to cut interest rates, citing the need for more clarity before making any policy moves.
The European Central Bank lowered its key interest rate by 25 basis points at its monetary policy meeting today as expected.
Producer prices in Germany unexpectedly dropped by 0.2% year-on-year in March 2025, reversing a 0.7% increase in February and missing market forecasts of a 0.4% gain. This marked the first decline in producer prices since last October.
Australian employment rebounded in March. A report from the Australian Bureau of Statistics showed net employment increased 32,200 in March from February, when it declined by a revised 57,400. This was just under market forecasts for a 40,000 Increase.
Australia’s jobless rate increased to 4.1% from 4.0%, but was still under forecasts of 4.2%.
INTEREST RATE MARKET FUTURES
Futures are lower across the board but were able to partially recover when the weaker than forecast April Philadelphia Federal Reserve manufacturing index was released.
Michael Barr of the Federal Reserve will speak at 10:45 central time.
The Federal Open Market Committee is predicted to lower its key interest rate by 25 basis points four times in 2025 with the first reduction likely at the June meeting.
The interest rate market futures have recently underperformed the news.
STOCK INDEX FUTURES
Housing starts in March at an annualized rate were 1.324 million when 1.420 million were expected, and permits at an annualized rate were 1.482 million when 1.450 million were anticipated.
The April Philadelphia Federal Reserve manufacturing index was -26.4 when 6.7 was estimated.
Stock index futures advanced when the Philadelphia Federal Reserve manufacturing index was reported, since it gives more room for the Federal Open Market Committee to be more accommodative sooner.
An accommodative Federal Reserve monetary policy remains an underlying long term supportive influence.
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