RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

USD continues its path higher, gaining 81 points thus far for the week of March 6.  A strong US growth and employment picture coupled with a “hawkish” interest rate environment keep the bulls in charge for now.  The CME Fed Fund Futures are now forecasting a 100% chance of a 0.25% interest rate hike at next week’s FOMC meeting.  The technical picture still suggests that further upside potential remains, and with the potential for a strong NFP Employment reading on Friday March 10th could be the fundamental catalyst that helps drive the USD Index futures to test its annual high of 1.03815 obtained on Jan 3, 2017.  The strength of the USD has seemingly tempered US inflation expectations which have been slowly gaining momentum since Q3 2016.  

Inversely to the USD Index, the outlook for the Foreign Currencies (EUR, BP, CAD, AUD) has been extremely grim as of late.  The Euro currency has surprisingly held up the best this week, and may be attempting to find some intermediate term support along 1.0500, however the path of least resistance remains lower.  The March British Pound has suffered a more than 400 pt correction since the end of February, which can largely be attributed to the strength of the USD/hawkish US Federal Reserve and also the BREXIT effect.   However, we believe there’s much to be encouraged by in the UK regarding the longer term UK growth and inflation picture.  Having recently heard from the UK Finance Minister regarding positive momentum in British economic conditions, its of my belief that the British Pound could be one of the most undervalued world currencies at the present moment.  As always, good luck out there, and feel free to reach out to me for any questions and or directional trade strategies by email. 

Note: Bullish structure on the USD since FEB 1; Key pivot area would be a close below 101.400

 

Dollar Index Daily Chart

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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