Written Commentary
Ag Market View for July 26.24
July 26, 2024
CURRENCY FUTURES
The U.S. dollar index advanced to above the March 2023 highs, hitting the highest level since December 2022.
The bullish influence of the ongoing hawkish Federal Reserve remains the dominant influence. The U.S. Federal Reserve made it clear that interest rates in the U.S. will stay higher for longer.
In addition, there is the safe-haven cash demand ahead of a potential U.S. government shutdown.
In the longer term, interest rate differential expectations remain favorable for the greenback. Financial futures markets are pricing in an almost 40% probability of another Fed hike this year, against smaller chances for another interest rate increase in Europe.
Sentiment among German exporters declined further in September, falling to its lowest level since May 2020, according to a survey by the Ifo economic institute.
In its fifth consecutive month of decline, the institute’s export expectations indicator declined to -11.3 in September, from – 6.5 in August.
Japan’s finance minister said foreign exchange moves are being closely monitored with a great sense of urgency, and appropriate action will be taken against rapid foreign exchange moves.
STOCK INDEX FUTURES
U.S. stock index futures are lower due to the hawkish Federal Reserve, the bearish influence of a potential shutdown of the U.S. government and ongoing labor strike activity.
If Congress does not pass a stopgap funding measure before Sunday, a shutdown of some agencies could delay the routine release of economic data on employment, inflation, wages and output.
There are three 9:00 central time reports. The September consumer confidence index is expected to be 105.9. August new home sale are anticipated to be 699,000 and the September Richmond Federal Reserve manufacturing index, which last month was -7.
Stock index futures are oversold at these levels.
INTEREST RATE MARKET FUTURES
The Treasury will auction 2-year notes today.
Michelle Bowman of the Federal Reserve will speak at 12:30.
Financial futures markets are predicting there is an 74% probability that the Federal Open Market Committee will keep its fed funds rate unchanged and a 26% probability of a 25 basis point increase at its November 1 policy 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.
