USD Index Higher Today

STOCK INDEX FUTURES

Stock index futures are mixed.

December wholesale inventories declined 0.5% when a 0.3% increase was expected.

The Federal Open Market Committee will conclude its two-day policy meeting today. A statement will be released 1:00 central time, and Federal Reserve Chair Jerome Powell will hold a press conference at 1:30.

The downside gap on the March S&P 500 daily chart at 6105.25 – 6122.00 that took place on January 27 is now a resistance area but most likely will be filled over the next few days.

In the longer term outlook, the bullish influence of prospects of a strengthening U.S. economy will more than offset the bearish influence of the Federal Reserve’s reluctance to ease credit conditions.

CURRENCY FUTURES

The U.S. dollar index is higher on Wednesday as President Donald Trump ramped up his tariff threats. President Trump recently announced plans to impose tariffs on imported computer chips, pharmaceuticals and steel, in an attempt to encourage domestic production of these goods.

Dollar Bill

On the March U.S. dollar index daily chart, prices on Friday declined below a double bottom level at 107.545.  There was only limited follow-through to the downside on Monday. However, prices advanced yesterday and today and are above the double bottom breakout level, which suggests Friday’s chart sell signal could be a false signal.

The GfK Consumer Climate Indicator for Germany declined to -22.4 heading into February 2025 from a marginally revised -21.3 in the previous period, missing market estimates of -20.

The German government on Wednesday reduced its 2025 growth forecast for the country’s economy to just 0.3% after it shrank for two consecutive years. The new projection is much lower than the government’s previous estimate of 1.1% growth that was issued in October.

The European Central Bank is widely expected to implement another 25 basis point reduction to its key deposit rate on Thursday following four cuts in 2024.

The Bank of Canada is expected to cut interest rates by 25 basis points to 3.0% today.

Australian consumer price index inflation grew slightly less than expected in the fourth quarter, while underlying inflation also eased but still remained above the Reserve Bank of Australia’s target range.

Data from the Australian Bureau of Statistics showed the consumer price index grew 2.4% year-on-year in the fourth quarter, which is its slowest pace since early 2021. The reading was just under expectations of 2.5% and eased from the 2.8% reported in the prior quarter.

The consumer price index grew 0.2% quarter-on-quarter, which is slightly less than expectations of 0.3%.

INTEREST RATE MARKET FUTURES

Futures are steady to higher.

There is a 99% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at 4.25% – 4.50% at today’s policy meeting, and there is a 1% chance of a 25 basis point reduction.

Financial futures markets suggest the FOMC will lower its fed funds rate by 25 basis points in May or June.

 

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