USD Index Futures Higher on What the Fed Said

December 15, 2016 10:22AM CST

Commodities futures markets continue to absorb hawkish rhetoric from the U.S. central bank after its unsurprising rate hike on Wednesday. U.S. dollar index futures jumped to its highest level since 2003.

In Thursday mid-day commodities futures trading, the March contract in U.S. dollar index futures was trading 1.49 percent higher at 103.245

Analysts say the main trend for USD index futures is higher and is likely to continue to be supported by comments from the U.S. central bank.

Following its two-day December policy meeting on Wednesday, the Federal Open Market Committee raised its target for the fed funds rate from a range of 0.25 percent to 0.5 percent to 0.5 percent to 0.75 percent. The FOMC hinted that rates rate may institute three additional rate hikes next year, three more in 2018 and another three in 2019.

This is a faster rate of increase than officials predicted in September when the Fed said the FOMC would raise rates only two times in 2017. Current predictions from some commodities futures markets analysts see the possibility of the FOMC raising its fed funds rate at its May meeting at 47 percent and at its June meeting, 78 percent.

Thursday’s economic calendar yielded a handful of reports for commodities futures markets participants to digest. The November Consumer Price Index rose 0.2 percent last month after 0.4 percent rise in October, and as gasoline price increases costs continued to weaken, , according to the U.S. Department of Labor.

The Philadelphia Fed came in at 21.5 for December, making for the best print since November 2014. The reading on the health of the manufacturing in and around Philadelphia far surpassed economists’ projections of a 9.1 reading.

Weekly Jobless Claims fell from a five-month high, dropping 10,000 to 258,000 for the week ended Dec. 3, according to the U.S. Department of Labor, and compared to predictions of 254,000. Economists cited continuing strength in the nation’s labor market as reason for the rise.

Lastly, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose to 70 in December, the highest level since July 2005 and above 50, considered the point between positive and negative growth. Fifty is the line between positive and negative sentiment. The index, at 60 one year ago, has not jumped by this much in one month in 20 years.

Tomorrow brings Housing Starts and Building Permits data for November.

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