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

UK 100 called to open -5pts, after a largely positive session for Asia, helped by the official statement from the G20 summit in Moscow suggesting Japan will not be singled out as a current manipulator (competitive devaluation of its currency versus peers) so long as it doesn’t target a specific exchange rate in order to reflate its troubled economy.

Debt and deficit levels nonetheless remain a tail risk for the global economy and the group wants continued work to remedy the situations which have resulted from the financial crisis. The JPY weakened on the news of Japan escaping direct criticism, which has helped exporters and the Nikkei equity index top the Asia-Pacific leader board overnight

While the G20 has reiterated its desire to see currency exchange rates market-priced, it does not point to Tokyo as weakening its currency intentionally. Nonetheless, the benefits of this helping Japan’s economic recovery from stagnation and deflation will surely be evaluated against higher costs of Japanese goods for US and European consumers (especially in Europe where the EUR has also strengthened). This is especially important when growth in these regions can’t really afford to be hindered during the hoped-for exit from the 4yr financial crisis. The subject of ‘currency wars’ is far from over.

Japan’s finance minister has objected to claims that policy action since his arrival is focused solely on deflation and new PM Abe, while saying he will leave policy decisions to the BoJ, has not refrained from further promoting what is now referred to as ‘Abe-nomics’, saying buying foreign bonds and measures to directly affect the stock market could be among the future options to stimulate the Japanese eocnomy. China back trading after New Year celebrations.

Overnight data limited to UK Rightmove House Prices which showed acceleration in price rises, something which may boost UK consumer confidence. In Australia, Motor Vehicle Sales growth slowed, while Machine Tool Orders remained in the doldrums, more data to support need for economic stimulus.

The focus today will likely be the fallout from the G20 summit and upcoming Italian election although the absence of many US markets on account of US Presidents Day Holiday, and an empty macro calendar will likely keep activity subdued, especially after the muted European and US close to last week.

UK 100 remains above the key 6300 level, although still with falling highs from the 13 Feb failed attempt at regain 6400.  So long as 6300 holds, there is potential for a rebound to 6400, and if underlying momentum remains, could even see a test above. A break below 6300, however, would likely open up the possibility of a correction to 6220, and possibly lower (6160).

In FX, GBP/USD still weak and in middle-ground between long-term support at 1.525 and the breached rising support line at 1.565 with USD in demand on prospect of US macro recovery rather than need for safehaven. EUR/USD found support at before 1.33 (in-line with long term rising support) but remains in February downtrend. Resistance 1.345.

In Commodities, Gold back above $1600 after brief test below on prospect of macro environment recovering, seeing less need for safehavens. Support $1600, resistance $1655. Oil, US Light Crude trading back down at Feb lows of $95 after rise in USD while Brent Crude maintains at the top end of its recent trading range, with resistance at $118.2, keeping the spread between the oils high.

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Overnight Macro Data: (Source: Reuters/DJ Newswires)

• UK                    Rightmove House Prices                     Improved
• Aussie              New Motor Vehicle Sales                   Growth slowed
• Japan               Machine Tool Orders                          Still very weak
• See Live Macro calendar for all details

UK Company Headlines: (Source: Reuters/DJ Newswires)

• Phytopharm Parkinson’s trial shows no benefit
• Salamander says Bualuang wells performing ahead
• Greencore says to introduce extra screening processes
• BATM Advanced Comms returns to net profit for year
• Costain, Skanska jv wins 110 mln stg Crossrail contract
• Gulf Keystone says court judgement may not come until June
• WH Ireland buys Tenebris’s private wealth management arm
• Advanced Oncotherapy agrees proton therapy buy
• LCH.Clearnet clarifies statement on LME contract
• Waterlogic sees year results in line
• Sirius Minerals signs marketing deal with Keytrade
• Vatukoula finds more high grade ore at drill
• Lamprell delivers turbine vessel