US Mortgage Applications Decline
STOCK INDEX FUTURES
Stock index futures are mixed to lower.
Mortgage applications in the U.S. declined 2.9% in the week ending September 1, hitting the lowest level since December 1996, according to data from the Mortgage Bankers Association. Applications to refinance a home loan fell 4.7% and those to buy a home were down 2.1%.
The 8:45 central time August PMI services index is expected to be 51.0.
The 9:00 August Institute for Supply Management services index is anticipated to be 52.4.
Major downtrend lines were taken out to the upside last week as the fundamentals have improved recently in the form of expectations of a less hawkish Federal Reserve.
Yesterday the U.S. dollar index advanced to its highest level since March 9. Some of the recent strength in the greenback is due to disappointing data in Asia and Europe.
The U.S. dollar is a little lower today but is likely to recover.
Interest rate differential expectations remain favorable for the greenback, especially against the European currencies, since the U.S. economy appears to be holding up relatively well compared to economies in Europe.
Longer term, higher prices are likely for the U.S. dollar and lower prices are likely for all the other major currencies.
Retail sales in the euro area decreased 0.2% month-over-month in July, following an upwardly revised 0.2% increase in June, compared with market expectations of a 0.1% drop.
Germany factory orders fell 11.7% at the start of the third quarter from June, which is much worse than the 4.3% drop expected by economists and the worst since 2020.
The Australian economy expanded 0.4% on a quarter-to-quarter basis in the second quarter, which is above market forecasts of a 0.3% growth.
The Bank of Canada is widely expected to leave its policy rate unchanged at 5.00% when it concludes the September policy meeting today, following the 25 basis points rate hike announced in July.
INTEREST RATE MARKET FUTURES
Futures are higher.
At 1:00 the Federal Open Market Committee will release its Beige Book. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Federal Reserve district bank compiles evidence of economic conditions from each of the 12 Federal Reserve districts.
Financial futures markets are predicting there is a 93% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 7% probability of a 25 basis point increase.
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