Massive New Stimulus from ECB
Alan Bush of ADM Investor Services - InsideFutures.com - Thu Mar 19, 9:09AM CDT

March 19, 2020

STOCK INDEX FUTURES

There were temporary gains in the overnight trade when the European Central Bank announced on Wednesday night an extraordinary 750 billion euro ($818.7 billion) asset-buying program to help the euro zone fight the consequences of the coronavirus outbreak.

Christine Lagarde, the president of the European Central Bank said, Extraordinary times require extraordinary action. There are no limits to our commitment to the euro.

U.S. President Donald Trump has plans for a $1.3 trillion economic rescue package that would add to measures unveiled by several other countries including Canada, the U.K., France and Australia.

Jobless claims in the week ended March 14 were 281,000 when 211,000 were expected.

The 9:00 February leading indicators report is expected to show a 0.1% decline.

The most important metric now to watch is the number of new coronavirus cases. Hopefully those numbers will plateau and trend lower soon.

CURRENCY FUTURES

The U.S. dollar index is sharply higher and is at its highest level since January 2017, as international demand for U.S. dollars surges.

In addition, there is the belief that the U.S. economy will hold up better than elsewhere in the world.

It seems that the U.S. dollar is the only flight to quality vehicle that has consistently performed as it should in recent days.

A variety of currencies hit multi-year lows against the U.S. dollar, including the British pound, the Australian dollar and the New Zealand dollar.

The euro currency is lower after a report showed German manufacturers saw their largest drop in confidence in 70 years. A measure of business expectations slumped to 82.0 from 93.2 in February. The overall index of confidence, which includes an assessment of the current situation, fell to its lowest level since August 2009.

The Reserve Bank of Australia today cut interest rates for a second time this month and said it will deploy unconventional policy measures, as the coronavirus pandemic threatens to pull the country into its first recession since the early 1990s.

The RBA cut the official cash rate by 25 basis points to a record low of 25 basis points from 50 basis points. RBA Governor Philip Lowe said the central bank will also set price targets in the bond market in an attempt to put further downward pressure on yields.

INTEREST RATE MARKET FUTURES

Traders are becoming more selective in which flight to quality vehicles to seek safety. Although the 30 year Treasury bond futures are higher today, they are well off the highs that were registered on March 9.

In recent weeks the front end of the yield curve has become less inverted and is flattish now, which is an encouraging sign for the possibility of at least some economic recovery late this year and into 2021.

SUPPORT AND RESISTANCE

June 20S&P 500

Support 2270.00 Resistance 2465.00

June 20 U.S. Dollar Index

Support 101.020 Resistance102. 950

June 20Euro Currency

Support 1.07750 Resistance 1.10400

June 20Japanese Yen

Support .91370 Resistance .93120

June 20Canadian Dollar

Support .68140 Resistance .69400

June 20Australian Dollar

Support .5500 Resistance .5849

June 20 Thirty Year Treasury Bonds

Support 167^24 Resistance 173^8

June 20Gold

Support 1460.0 Resistance 1510.0

May 20 Crude Oil

Support 21.68 Resistance 24.55

May 20 Copper

Support1.9700 Resistance 2.2000

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at alan.bush@admis.com. Thank you.


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