CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

Data surprise catches markets on the hop

Heading into the close, the FTSE 100 is 20 points higher, having comfortably outpaced its continental cousins for the week. 

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
London
Source: Bloomberg

The final trading day of the month can often be somewhat peculiar, but today has taken the biscuit. Normally, the US Employment Cost Index (ECI), which tracks wages and other employment benefits, doesn’t attract much attention, but in today’s lacklustre session investors seemed only too glad to latch on to the figure, which dropped to its lowest level since 1982.

Since the Federal Reserve has been very keen to track consumer spending as a gauge of the recovery, the data does have some importance, but usually it passes almost unnoticed. Today, however, it caused a handbrake turn in the dollar strength that had dominated for most of the day, leading to a strong reaction in key currency pairs like cable and Eurodollar.

US indices continued to post gains, building on the steady rally witnessed since Monday. Markets are evidently still very jittery about anything that threatens to undermine the current ‘rising dollar’ narrative.

Next week is going to be dominated by what happens on Thursday and Friday. The Bank of England’s decision to roll several events into one marathon session will likely lead to a long process of investigation as to whether this central bank will move first, while non-farms are certain to produce plenty of excitement given the volume-light sessions that prevail in August.

Overall of course, the big theme is still what the Fed does, but for next week we can expect Mark Carney and co to take centre stage. 

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.