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

  UK 100 called to open +15pts at 6640, with Asian bourses mostly following their US counterparts higher as risk appetite continues to build following the US 11^th hour US fiscal resolution (for a few months anyway), Friday’s China GDP, expectations of delayed Fed tapering given the impact of the government shutdown and the backlog of US macro data potentially being inconclusive of economic recovery and a some Q3 results beats.

 Data overnight saw UK house price rebound in October. Elsewhere Japan’s trade deficit narrows slightly although exports growth was slower than expected while imports were impacted by the weaker JPY. The BoJ’s Kuroda said economy making steady progress towards 2% inflation target.

 In focus today we have Chicago Fed which it will be hoped stays positive in September and US Exiting Home Sales which are seen taking a dive, likely on tighter financing costs and macro uncertainty. Q3 results wise, we have Halliburton and McDonalds before the US open and Texas Instruments after the close. Note US Non-Farm payrolls tomorrow.

 In Europe, Germany’s SPD has backed Merkel’s coalition talks and agreed to a series of economic demands (including minimum wage) ahead of negotiations. Greece will not agree to a new bailout if Troika demands more austerity. And an FT article indicates Brussels standing strong against ECB President Draghi’s curb on bank bailouts.

 The UK 100 maintains its rising channel from 8 October. Our expectations of the next hurdle being mid-September highs of 6665 has already been realised with a sell-off since the week’s open in Asia. Nonetheless, having broken above 6585 this is now support, with rising lows offering support even earlier at 6605.

 In FX, USD basket still depressed and below the 79.8 level as the US shutdown effects and prospect of QE3 for even longer take their toll. Support 79.55, resistance 79.77. GBP/USD off its best of above 1.6225 (below early Oct high) but still with support around 1.615.

 EUR/USD holding near Feb highs 1.37. USD/JPY back above 98 although still well off highs and in downtrend since mid-September. USD shunning (given another likely and impasse more QE3) seeing JPY benefit as safehaven.

 Gold holding above $1310 after its break above the trendline of falling highs since late August. $1350 might prove resistance, but like JPY, benefiting from safehaven seeking and weak USD. Platinum also seen a similar jump to Gold above falling trendline.

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