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Eurocurrency Lower Despite Inflation News

STOCK INDEX FUTURES

The U.S. employment numbers were mixed. March nonfarm payrolls increased 431,000 when an increase of 490,000 was expected. Private payroll were up 426,000 when up 458,000 was anticipated and the unemployment rate was 3.6% when 3.7% was estimated.

The 8:45 central time March PMI manufacturing final is estimated to be 58.5.

The 9:00 March Institute for Supply Management manufacturing index is expected to 59.0 and the 9:00 February construction spending report is anticipated to show a 0.9% increase.

Futures remain well above downtrend lines.

The main fundamental influences remain geopolitical tensions and the hawkish Federal Reserve.

CURRENCY FUTURES

The euro currency is lower despite news that flash estimates showed the headline HICP inflation rate in the euro zone surged again in March, hitting a new all-time high of 7.5% compared to 5.9% in February and well above market expectations of 6.6%.

The Swiss franc remains near a three-week high as rising inflationary pressures strengthened the case for tighter monetary policy from the Swiss National Bank. Inflation in March pointed to a 13-year high of 2.4%, as estimated.

Interest rate differential expectations remain bearish for the Japanese yen.

Lower prices are likely for the yen.

INTEREST RATE MARKET FUTURES

Traders are keeping a close watch on the yield curve, which measures the spread between short-term and long-term rates and is often seen as a strong indicator of sentiment about the prospects for economic growth.

Markets are anticipating a policy tightening cycle with major central banks attempting to tame inflation, currently running at record levels in Europe and 40-year highs in the U.S. Federal Reserve officials, including Chair Powell, continue to make hawkish comments leading markets to believe there is a higher probability of the Federal Reserve lifting rates by 50 basis points in May.

Currently there is a 75.0% probability of a 50 basis point increase and a 25% probability of a 25 basis point hike in the fed funds rate at the May 4 policy meeting.

Lower prices are likely across the board for the interest rate futures market as most major central banks are anticipated to tighten credit policies this year.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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