The potential for a wage spiral seems exaggerated. The employment cost index is 1.0% q/q. This is lower than the forecast of 1.1% q/q and the previous 1.2% q/q. Tomorrow, the Fed will hike by 25bps and release its statement. The lower than anticipated costs will be welcomed by the central bank.
The real rate spiked down (blue arrow) following the release with money moving back into risk. The SPX500 jumped on the hourly (green arrow).
The SPX500 is trading in its daily bullish channel between the upper blue and red bands. The better employment costs have improved market mood and the hourly EMAs and stochastic are crossing up (black ellipses). A stochastic in the 80+ level and holding (blue arrow) will connote that a bullish swing is underway.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.