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Bank of Japan Less Accommodative

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January 9, 2018


Stock index futures advanced to new historic highs yesterday. Some of the gains were linked to news that U.S. consumer credit posted its largest gain in 16 years.

Outstanding consumer credit rose by $27.95 billion in November from the prior month, when an increase of $18 billion was expected.

Prices are higher today in spite of the weak National Federation of Independent Business Small Business Optimism Index, which fell in December from the prior month.

The 9:00 central time November Job Openings and Labor Turnover Survey (JOLTS) is expected to be 6.038 million.

The computer models that I use, which incorporate leading indicators on the economy, continue to generate bullish signals for stock index futures.

The main trend for stock index futures is higher.


The U.S. dollar is higher due to the increased probability of a rate hike at the March FOMC policy meeting.

The euro currency fell hard yesterday as a result of concerns that the European Central Bank may attempt to talk down the surging euro ahead of its monetary policy meeting later this month.

The euro is lower again today in spite of news that the euro area jobless rate fell to the lowest level in almost nine years. The unemployment rate dropped to 8.7% in November from 8.8% the prior month.

The Japanese yen is higher after the Bank of Japan in an unexpected move reduced the size of its bond repurchase offer by 5% in its latest market operation. This is the first cut in debt purchases since 2016, which sends a signal that the extremely accommodative monetary policy is coming to an end.

The Canadian dollar and the Australian dollar are lower in spite of firming crude oil prices.

Some of the selling in the Canadian dollar is linked to a report that showed housing starts in Canada fell 13.8% in December from November.

In the longer term, the Canadian dollar and the Australian dollar, the commodity currencies, are likely to trend higher against the U.S. dollar.


Minneapolis Federal Reserve Bank President Neel Kashkari will speak at 9:00.

The Treasury will auction three year notes today.

The probability of a fed funds rate hike at the FOMCs March 21 policy meeting is 68%, which compares to 63% yesterday.

In the longer term outlook, futures are likely to work lower, as it is likely that commodity and wage inflation will accelerate this year and be above the consensus estimates.

This will adversely impact the 30 year Treasury bond futures the most, since the long end of the curve is the most susceptible to the inflation influence.


March 18 S&P 500

Support 2739.00 Resistance 2755.00

March 18 U.S. Dollar Index

Support 91.590 Resistance 92.450

March 18 Euro Currency

Support1.19550 Resistance 1.20350

March 18 Japanese Yen

Support .88530 Resistance .89350

March 18 Canadian Dollar

Support .80240 Resistance .80850

March 18 Australian Dollar

Support .7803 Resistance .7877

March 18 Thirty Year Treasury Bonds

Support 150^20 Resistance 152^30

February 18 Gold

Support 1309.0 Resistance 1325.0

March 18 Copper

Support 3.2200 Resistance 3.2650

February 18 Crude Oil

Support 61.63 Resistance 62.69

For more information about these markets, please contact Alan at 312.242.7911 or via email at Thank you.

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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 risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. 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.

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About the author

Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the “Futures Tech Focus” program, which is a technically based market outlook.

Alan served on the faculty of Oakton College as instructor of a course entitled, “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports.

Alan can be reached at (312) 242-7911, or via email at

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