U.S. equity futures finished the day mixed as demand for higher yielding assets dropped along with volume. Dow and S&P 500 futures fell, but the NASDAQ was able to post a gain driven by M&A activity.
The U.S. Dollar finished up for the day in a move which began on Friday. At that time investors began to pare positions ahead of this week’s FOMC and G-20 meetings. Traders are lightening up their short Dollar positions in anticipation of an announcement by the Fed to end its stimulus programs.
Some traders also believe that the Fed is working on an exit strategy. Investors will also be watching the G-20 meeting later this week. Among the topics to be discussed are government stimulus and the Dollar as a reserve currency. Investors expect to get clarity from other central banks as to the timing and the impact of ending government stimulus plans. In addition, there will most likely be discussion about reducing the U.S. Dollar’s role as the global reserve currency.
U.S. Treasury futures were able to post modest gains ahead of this week’s auction. Expectations are for additional supply to put some pressure on December T-Notes and T-Bonds. These markets could firm if demand is steady. Traders are concerned that China may retaliate against the U.S. because of the new tax on tires by curtailing demand.
The stronger Dollar put pressure on December Gold and December Silver. The chart pattern suggests that these two markets may need to build better support areas in order to support higher prices. The recent spikes to the upside suggest short-covering rather than new buying. If $993.00 cannot hold gold then look for a pull-back to $970.00.
Concerns over the lack of demand and solid proof that the global economy can show growth without government stimulus, weighed on the energy complex today. Traders are worried that supply will continue to outstrip demand.
