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

UK 100 called to open +30pts at 6575, with Friday’s US employment data-inspired rebound continuing, helped by a combination of persistent uncertainty as to whether tapering is actually announced this month and markets starting to warm to the inevitability of reduced asset purchases, accepting it as a sign of economic progress.

Sentiment also helped by the Fed’s Evans suggesting he’d prefer to see a few more months of solid jobs data before tapering and is in favour of a lower unemployment threshold of 6.0%. At odds, however, was his 2014 voting replacement Plosser calling for immediate tapering and a cap on QE3.

In Asia, markets mixed with Japan’s Nikkei benefiting from the US jobs data sending USD/JPY back >103 to help exporter equities, even if Japanese Q3 GDP was revised down along with a surprising current account deficit. The BoJ’s Kuorda said QE producing anticipated results has will continue for as long as necessary to achieve inflation target.

Australia in the red after another profits warning (this time insurer QBE), while the AUD is stronger despite US jobs data, helped by much better Chinese trade data (AU’s biggest trade partner) thanks to exports accelerating and imports still at record pace. Slower inflation also allows wiggle room to tweak reforms to maintain growth into 2014.

In Europe, over the weekend, the ECB’s Weidmann (against rate cut and negative deposit rates) said the single currency’s central bank stands ready to act if inflation slows was to threaten the region’s weak recovery. Greece’s parliament has also approved its 2014 budget, but negotiations with the Trioka won’t resume until January. Germany’s trade surplus also dropped a bit more than forecast with imports surging while exports slowed.

In focus today we have a quiet line-up with just Eurozone Sentix Investor Confidence seen improving to >10 and German Industrial Production seen rebounding, although remember that last weak German Factory orders for October were disappointingly weak.

The UK 100 has rebounded from around the 6500 level and made some ground. Nice to see, but the scrooge in me must point to resistance around 6610 and then the bugbear falling highs which have eluded us since end-October around 6650.

In FX, the USD dollar is solid around 80.3, but back around where it was before the US jobs data. Hmm, less belief in December taper? GBP/USD holding above 1.63 trendline from May 2012 thanks to prospect of UK rate rise before US. EUR/USD fallen back below 1.37 after its foray above. Still no new measures from the ECB to weaken it.

In commodities, Gold back around the $1230 level it was trading it before the US jobs data (a bit like the USD index). Falling highs at $1250 to contend with on next jaunt higher. Support around $1215.

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