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

  UK 100 called to open -5pts at 6650 on the day the US celebrates Thanksgiving, now held back not so much by the trendline of falling highs from end-October, but now by the breached rising lows from mid-November at 6670. Could this imply double trouble for the ugly duckling of the majors?

 The negative open (compared to European peers) is despite a positive Asia-Pacific session, on the back of further US gains (yet more records for DJIA and S&P500) thanks to encouraging macro data (jobs, confidence) which boosted optimism in the world’s #1 economy and saw USD strengthen from recent lows on the prospect of a tapering of QE3 on its way.

 USD/JPY moved above 102 to levels last seen in May, on US data being taper positive and the chances of more BoJ intervention next year. The weaker JPY helped Nikkei exporters and the index to its highest in 6 years. Note mixed Japanese Retail Sales which have failed to dampen optimism.

 Australia is little changed with a much stronger reading than expected for Private Capital Expenditure although has been offset with a plunge in Home Sales and AUD given up ground. China’s PBOC again added net funds into the money markets to dampen deleveraging fears but China and Hong Kong equities stull benefiting from mainland reform hopes.

 In Europe, Berlusconi has been ousted from the Senate which likely reduces his direct political influence, and helps with Letta’s confidence vote win, but his indirect influence will likely remain a worry. The ECB’s Constancio said the bank is technically ready for negative deposit rates, but only in an extreme situation. After the excitement of Merkel’s grand coalition formation, hopes may be more muted.

 In focus today we have Spanish GDP and CPI, expected to be just positive, at odds with Northern neighbours like France. German Unemployment seen unchanged. Eurozone Confidence seen delivering very slim gains. German CPI seen just positive after a worryingly negative reading which may have forced the ECB to cut rates recently.

 After two days below 6660, this level may be the new 6700 bugbear. Falling highs from end-October may have been replaced by breached rising lows from mid-month at 6670. Potential sideways move on account of US holiday and leading to thinner volumes both today and tomorrow.

 In FX, USD basket bounced from 80.5 lows to test 80.8. Falling highs from 21 Nov still to be broken at 80.75, but possible bullish flag pattern forming with upside to 80.9? Strong US data increasing expectations of tapering round the corner.

 GBP/USD testing Q4 2012 highs 1.63 after breaking above the major falling resistance since at 1.625 from 2009. Strong UK GDP outweighed taper-positive US data.

 EUR/USD back from recent highs 1.36 on stronger USD and prospect of more ECB easing/help measures. USD/JPY holding above 102 at 6-month highs helped by strong USD and  BoJ doubts on recovery and inflation.

 Gold holding around $1240 after a failed test of $1250 falling resistance. Possible that we drift through the falling trendline from end-October before bargain-hunters step in again, but potential double-top at $1255 combined with a bearish flag pattern suggesting downside to recent lows $1225.

 For any help you may require placing trades or in terms of market information, put a call in to our trading floor – all part of the service.