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US Dollar Resumes Downtrend


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STOCK INDEX FUTURES

U.S. stock index futures are higher as negotiations in Washington continue over a nearly $2 trillion fiscal stimulus package.

More than a quarter of companies in the S&P 500 have reported through Thursday, and 83% of them have beaten analysts' forecasts for earnings-per-share, according to FactSet.

The 8:45 central time October PMI composite index is expected to be 54.2.

The technical situation remains positive for stock index futures.

CURRENCY FUTURES

The U.S. dollar is lower, resuming its downtrend. Lower prices are likely for the greenback longer term.

The euro currency is higher and remains near a five-week high. Higher prices are likely for the euro longer term.

The euro zone October composite PMI flash is estimated to be 49.4, which compares to the forecast of 49.3 and the German October manufacturing PMI flash is estimated to be 58.0 when 54.8 was forecast.

The British pound is higher and remains close to a six-week high as prospects for a trade deal have increased.

The U.K. manufacturing PMI fell to 53.3 in October of 2020 from 54.1 in September, compared to forecasts of 53.1.

INTEREST RATE MARKET FUTURES

In another indication that investors expect quicker growth and inflation, the U.S. Treasuries market yield curve has steepened.

Interest rate market futures at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep short term interest rates low for an extended period. Many analysts believe it will be several years before the Federal Reserve will be in a position to hike its fed funds rate.

However, futures at the long end of the curve, especially the 30-year Treasury bond futures may be undermined by the inflationary aspects of the Federal Reserves average inflation targeting policy.

Financial futures markets are predicting there is a 98.8% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at the November 4-5 policy meeting.

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at alan.bush@admis.com . Thank you.

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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 alan.bush@admis.com.

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