FTSE finishes strongly
The FTSE 100 is set to have a good finish to a bad week. There has been little to get excited about this week, and the focus now shifts to next week's European Central Bank meeting and non-farm payrolls.
The index has been drifting lower as traders have been banking their profits from the 14-year high reached earlier in the month. Traders are slipping into the old habit of depending on central banks to provide them with a reason to go long. Ideally Mario Draghi won’t have to cut interest rates again, all he will have to do is allude to more monetary easing and that will be like a red rag to a bull.
US markets drift lower
In the US, the Dow Jones is down 13 points at 16,832. Next week’s non-farm payrolls is due out on Thursday; it is usually announced on the first Friday of the month but on this occasion it coincides with Independence Day.
The US economy has clawed back all the jobs it lost during the recession. Growth in the first quarter took a hit, and analysts are expecting the figure to be over 300,000, similar to the last report. This could be the fifth consecutive month of adding in excess of 200,000 jobs.
Copper runs out of steam
Brent has been drifting lower as traders are no longer as fearful about the situation in Iraq. The arrival of US secretary of state John Kerry has brought a sense of calm and stability to the oil market.
Copper has had a good run this week but it is running out of steam, the focus turns to the official and HSBC manufacturing reports from China on Tuesday. Most recent reports have shown an increase in manufacturing and good figures could restart the rally.
GBP/USD clings to $1.7
The pound is holding onto the $1.7 handle after the UK GDP second estimate was in line with expectations. Mark Carney’s comments let us know that interest rates will not be rock bottom forever, but the rule book has been rewritten as to what ‘normal’ interest rates will be.
The minimal increase in German inflation will most likely lead to no change in monetary policy for Thursday’s meeting, and Mario Draghi will try and talk the euro lower than use monetary tools.