FTSE 100 - All eyes on US CPI as traders weigh up whether the Fed is done

• Stocks positive ahead of CPI
• Can the US deliver another promising surprise?
• Range-bound but another slide could test 7,400

It's been a positive start to trading on Thursday, with European stock up around 1% and US futures not far behind.

Whether that will last into the end of the session may ultimately depend on the US inflation report, which is released shortly before the opening bell on Wall Street. It will take something big for the Fed to consider hiking again you would think, having shifted to a more gradual approach in recent months.

To hike again in September could alarm investors and suggest the central bank has a lot more to do which wouldn't really be consistent with headline inflation around 3% and core below 5%. A big spike in these, particularly the latter, could make investors nervous but it would need to be substantial to even consider raising again next month.

Another promising report, especially one that sees a beat on headline and core again, could see enthusiasm spread throughout the markets once more. Especially if the headline number slips below 3% which, from a psychological perspective could be a big moment. Suddenly the 2% target feels within reach, although in reality core running around 5% would indicate that's not sustainable.

Is there further downside to come for UK100?

While the UK100 has made steady gains over the last week, it's done so after suffering a sharp decline and the question on traders' lips will be is there more to come?

UK100 Daily

Source - OANDA on Trading View

Broadly speaking it remains rangebound between 7,400 and 7,700 where it's mostly traded since May. As things stand, there's nothing to suggest either of those levels are looking vulnerable but another sharp plunge could see the former tested. Especially if accompanied by some stronger inflation data.