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

UK 100 called to open -10pts at 6690, still struggling with falling November highs around 6700 after a mixed close in the US – light trading ahead of the Thanksgiving holiday on Thursday – although the bourses are still pointing north and trying new highs, and a similar session in Asia-Pacific as equities lost some steam.

Asian equities just in the green except for Japan which is hindered by a stronger JPY (USD/JPY back from 102 highs) as the Nikkei continued to ease off from 6-month highs on profit-taking despite further Fed assurances that tapering does not mean tightening and expectations of the BoJ easing more next year when the sales tax is introduced.

Asia also dented by less upbeat BoJ minutes than expected and even some disagreement over the 2015 2% inflation target. In Australia, the RBA’s Lowe played down housing bubble concerns and the AUD fell on dampened speculation of intervention in the FX market.

US Secretary for State Kerry said not to underestimate difficulties in Syria in terms of political solutions, which on top of scepticism over Iranian deal highlights the region’s hold over global sentiment.

In Europe, the ECB/Bundesbank’s Weidmann said Europe on track for gradual recovery while colleague Noyer suggested a weak and fragile one. Weidmann also said ECB Council should not permanently supervise banks.

In focus today, we have US Building Permits and S&P/Case-Shiller Prices which will be of interest given the miss by Pending Home Sales yesterday and the importance of the property market within Consumer Confidence, which itself is seen improving. After mixed Fed readings (Philly & Dallas Miss, Kansas in-line) the Richmond Fed is seen improving.

Central banker speaker-wise, we have BOE governor Carney testifying with other MPC members in front of the UK’s parliamentary Treasury Select Committee. The ECB’s Mersch and Van Rompuy are also scheduled to communicate with markets, while Germany is expected to resume coalition talks potentially the final stretch bar the sticking points such as a national minimum wage.

UK 100 still unable to break above the 6700 level of falling highs from end-October (a bit like Gold), meaning still potential for declines to recent lows 6460/6610. However, should the current sideways move persist (it could remain quiet on account of US absence later in the week) then the index would naturally move through this trendline freeing it up for a renewed up-move. Note momentum on daily chart still flirting with positive.

In FX, USD basket lost ground from its Iranian Nuclear deal rally to 81.05, to trade  back around 80.8 overnight. So much talk of work to do with Tehran and talk of tapering not being tightening.

GBP/USD back below 1.62 after the USD strengthened, and still under pressure from recent highs as well as major resistance from multi-year falling highs around 1.625.

EUR/USD moved higher despite stronger USD to almost regain 1.355 as the talk of negative deposit rates continued to be discussed as well as dismissed. USD/JPY back from near 102 high on stronger USD to trade 101.5. Support around 101.37.

Gold rebounded on scepticism over Iranian Nuclear deal and despite stronger USD. Note the yellow metal testing falling highs from end-October at $1255 as bargain hunters jumped in and safehaven demand increased slightly. A break above this level could help with renewed appetite and return to $1300 but if the resistance holds a move down to $1200 is still possible.

Oil markets are sceptical of the Iranian nuclear deal leading to an increase in oil supply, with US light Crude rebounding to the middle of its 1-month $93.2-95.6 range, however, Brent Crude shows even more doubt with the price regaining prior-deal high of $111.

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