Tuesday’s Futures Outlook: US Dollar Trading Weaker This Morning

U.S. equity futures are called higher this morning as Asian and European investors turned their attention toward risky assets after standing aside for the past three days. Investors are selling Dollars in anticipation of the Fed leaving interest rates unchanged until at least the end of the year. Traders are also expecting to hear good news regarding the global economic recovery from the G-20 meeting later this week. Basically, investors cannot find a reason to buy Dollars other than oversold conditions which were taken care of by the recent two day rally.

Treasury futures are expected to open lower this morning. Investors are selling T-bonds and T-notes in anticipation of the start of this week’s $112 billion auction. With equity markets offering a strong return, Treasuries may need to offer higher yields in order to attract strong demand.

The U.S. Dollar is trading weaker this morning following a two day short-covering rallying. The December Euro is trading at a new high for the year as traders increased demand for higher yielding assets. Higher crude oil and equity prices are helping to support the December Canadian Dollar. Traders have set aside their concerns about the U.K. economy and financial system and are buying the December British Pound after several days of extreme weakness. Investors have resumed their interest in the long side of the December Japanese Yen after a couple of days of profit-taking.

December Gold is rallying this morning because of the weaker Dollar. Selling pressure had broken gold under $1000 which made the metal more attractive. Traders seem reluctant to buy strength which means this market could be taking on the characteristics of the equity markets where traders prefer to buy the dips. Look for higher markets as long as the Dollar remains weak.

Traders are once again buying December Crude Oil as traders seek higher risk assets. The weaker Dollar is making dollar-price crude oil an attractive buy. The supply/demand picture has not changed but traders may be anticipating good news from the G-20 later this week which points toward greater demand because of a global economic recovery.

November Soybeans and December Corn seem to be building a support base after several days of weakness. The lower Dollar may lead to a pick-up in foreign demand while shorts remain skeptical about adding to their positions because of the threat of an early frost.

DISCLAIMER: Futures and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication by or from Brewer Futures Group, LLC, Brewer Investment Group, LLC, or their subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Subscribe by RSS Subscribe by Email