USD Index Futures Range Bound Post-Data

October 5, 2016 6:03AM CDT

U.S. dollar index futures are hanging around unchanged Wednesday after a slew of economic data hit the commodities futures markets.

The December contract in U.S. dollar index futures was down .01 percent at 96.115 in Wednesday mid-day trading, with little movement as commodities futures markets stay in quiet mode ahead of Friday’s September Employment Report.

Wednesday’s economic calendar was heavy with reports to absorb in the commodities futures markets, particularly within the currency futures sector. The August Trade Balance rose to $40.7 billion in August from $39.5 billion the previous month, according to the U.S. Department of Commerce. Most analysts had expected more substantial widening to above $41 billion for the month.

Analysts say there will be a sustained improvement in confidence surrounding exports, which will tend to make the Federal Reserve less fearful over the potential negative impact of a strong U.S. dollar if interest rates are increased further over the next few months, which will further impact U.S. dollar index futures.

Meanwhile, commodities futures markets analysts say higher crude oil futures prices supported the futures sector of “commodity currencies” which includes the Canadian dollar and the Australian dollar futures contracts.

The Institute for Supply Management Services Index jumped to a reading of 57.1 percent in September from 51.4 percent in August, compared to economists’ expectations of a reading of 53.1 percent. Any reading over 50 percent indicates improving conditions.

Factory Orders rose 0.2 percent in August after a downwardly-revised 1.4 percent increase in July, according U.S. Commerce Department. The report compares to forecasts of a decline of 0.1 percent, and was the second straight monthly increase following two months of weakness.

U.S. ADP private payrolls increased 154,000 in September, compared to expectations of an increase of 160,000. The report precedes Friday’s September Employment Report from the U.S. Department of Labor, which will be closely watched by commodities futures market participants as it will give clues to the U.S. Central Bank’s next move toward interest rates.

On Wednesday the probability that the Federal Open Market Committee will hike its fed funds rate at the November 2 meeting is 13 percent, compared to 11 percent on Tuesday. For the December 13-14 policy meeting, it is 63 percent, just above 62 percent, while the June 14, 2017 meeting probability is 75 percent.

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