Lower Prices Likely for the Dollar

CURRENCY FUTURES

The U.S. dollar index fell to its lowest level since August 4 ,2023.

Lower prices are likely for the U.S. dollar longer term.

dollar bills

German import prices fell 9.0% year-on-year in November 2023, following a 13.0% decline in the previous month, marking the ninth consecutive period of falling import prices.

The Swiss franc advanced to the highest level against the U.S. dollar since 2015 and is near a nine-year high versus the euro.

The U.K. economy shrank 0.1% on the quarter in the third quarter, compared to initial estimates of a flat reading.

One of the Bank of England’s most hawkish policymakers appeared to signal that he is re-thinking his “higher-for-longer” position on interest rate policy after Wednesday’s unexpectedly sharp decline in inflation.

The annual inflation rate in Japan declined to 2.8% in November 2023 from 3.3% in the prior month. The core inflation rate declined to 2.5% from 2.9%, matching the consensus view. On a monthly basis consumer prices decreased 0.1% after a 0.7% gain in October.

Industrial production in Japan was projected to shrink 1.6% in November from the previous month, according to a median estimate of economists, followed by 1.3% growth in October.

STOCK INDEX FUTURES

Stock index futures are mixed to higher and are performing better than the news would suggest.

Durable goods orders in November were up 5.4% when an increase of 2.4% was expected.

Personal income in November increased 0.4% as anticipated, and personal consumption expenditures were up 0.2% when up 0.3% was forecast.

The 9:00 November new home sales report is estimated to show 690,000.

The 9:00 December consumer sentiment index is anticipated to be 69.4, and year ahead inflation expectations are predicted to be 3.1%.

The fundamentals and technicals remain supportive to stock index futures.

INTEREST RATE MARKET FUTURES

Futures were supported by the belief that the Federal Reserve will pivot to cutting interest rates next year.

Financial futures markets are predicting there is a 16% probability that the Federal Open Market Committee will reduce its fed funds rate by 25 points at its January 31, 2024  policy meeting and an 84% probability of no change.

 

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