Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 called to open -5pts at 6440, with US government still in partial shutdown and no Congressional agreement in sight weighing on sentiment. While most are more worried about failure to raise US debt ceiling, and possible sovereign default, surprisingly little relief from House of Representatives speaker Boehner saying he won’t let that happen.

Sentiment also likely held back President Obama’s comments that a prolonged budget standoff would likely impact the economy markedly, likely referring to Q4 GDP and markets focus on macro-data. On the other hand, it just slams and locks the 2013-door for tapering.

US markets closed lower, but off worst levels on some budget hope (Boehner softening, some Democrats in favour of repealing medical devices tax within Obamacare, some work towards paying some government workers).

Our view on tapering supported by Fed’s Williams saying Fed timeline still intact but data dependant and political uncertainty just means rates lower for longer (USD weaker). Twitter revealed IPO filing adding to recent numerous corporate events.

Asian markets lower overnight (China still closed for Golden week, escaping US shutdown worries) taking the lead from US, and many still worried US gridlock and debt ceiling. In Japan, the BoJ unanimous in leaving policy unchanged and to keep pumping stimulus, showing progress with reflation goal and rising business confidence.

In focus today we have a limited data slate on account of US employment data (NFP) not being available due to Department of Labor being impacted by government shutdown.   What are we all to do without our monthly fix of jobs data? How can we make assumptions and overanalyse the Fed’s policy path on QE3 tapering? Panic!

Watch out for UK Employment confidence and Eurozone PPI and to make up for the lack of US data we have a busy schedule of Fed speakers likely to keep us on our toes with conflicting views and different takes on the policy drivers.

After the UK 100 ’s rebound to 6475, we’re back at 6440, in the middle of the week’s range. Support overnight at 6420. Resistance at 6440. Tight range to start the last day of the week. Possible quiet session into the weekend. A major US announcement still likely needed to shake things up.

In FX, USD Index still under much pressure, trading 79.8 having fallen back from its tests of 80. Still falling highs at 80.1. GBP/USD back below 1.62, but holding above 1.615. Major multi-year trendlines have played their part as hurdles. EUR/USD still benefiting from US fiscal disarray, trading above 1.36, also helped by the less dovish Draghi of Wednesday.

Gold still not playing ball and confounding markets with US problems failing to be a help. Trading $1318 but failing for three days to break back above the rising support trendline abandoned on Tuesday. Reverted to resistance? Falling September highs at $1330 a hurdle.

US Light Crude oil back from its spike of Wednesday to trade $103 and Brent $108. Progress from recent lows, but trouble regaining previous support or breaking above falling highs. Obama comments on US shutdown impact on Q4 growth weighing.

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