USD Futures Creep Higher on ECB Plans

December 8, 2016 5:06AM CST

U.S. Dollar index futures prices are moving steadily higher, mainly due to the results of the European Central Bank policy meeting.

The March contract in U.S. dollar index futures was up .89 percent at 101.30 in mid-day commodities futures markets trading and after an earlier high of 101.240.

The ECB said it will extend its economic stimulus program to support growth. It will spend almost $600 billion on bond purchases and extended the bond-buying program through the end of 2017. The bond-buying program was scheduled to conclude at the end of March, but the ECB surprised investors by saying it will reduce the size of the monthly purchases after that date. The central bank said that is not a sign it is getting ready to phase out the stimulus. Benchmark interest rates were left unchanged.

The ECB added that if “the outlook becomes less favorable or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation" then it would reevaluate the duration or size of the program.

Analysts say U.S. dollar index futures are expected to continue to rise, especially since one or more rate hikes from the FOMC could be in the cards in 2017. At present, commodities futures markets fully expect a rate hike at the Federal Open Market Committee meeting next week.

Adversely, some analysts say the Fed’s possible rate hikes will not have as much of an impact on U.S. dollar index futures in the coming year. One said the Fed's reason for raising rates will come from inflation expectations, and added that inflation is one of the most destructive forces for the U.S. dollar

Back on domestic soil, the reports of note to commodities futures markets include Weekly Jobless Claims, which came in on target at 258,000 according to the U.S. Department of Labor. The report measures the number of individuals filing for initial jobless benefits in the latest week, fell from 268,000 in the prior week. The total number has not crossed 300,000 for 92 straight weeks.

Wednesday’s October Consumer Credit report came in at  $16 billion, well below economists’ forecasts of around $18.4 billion and the prior month’s reading of $21.8 billion, according to the U.S. Federal Reserve. It was a result of a shift away from mortgage debt and toward other forms of credit, particularly student loans, which have exhibited steady, uninterrupted and in many cases, unwelcome growth in recent years.

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