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

UK 100 called to open +15pts at 6290, still in its recovery uptrend from Friday’s lows and probing north again for a second attempt at 6300. The Bulls are watching this level carefully as a breakout could deliver a bullish inverse head & shoulders reversal (formed over the last 5 weeks) and another 250pt rally. The bears will be hoping we get another turn back from 6300 before a retrace towards Friday’s lows. Watch levels: Bullish 6305, Bearish 6265.

The positive opening call comes after gains for Asia and the US thanks to Fed Chair Janet Yellen adopting - as expected - a more dovish tone in the wake of Friday’s US jobs data, effectively scrubbing a June rate hike from the FOMC calendar. While the US dollar basket is flat since Friday’s drop, it could be in a holding pattern pause (bearish flag?) before another down leg that could help the commodities space and miners with another leg higher.

Yellen made every effort to deliver a positive assessment of the US economy (she has to really, doesn’t she?) but her mention of uncertainties such as Brexit and China highlight the importance of the situation outside the US. This could yet see market expectations for the next rate hike pushed back even further given the calendar of event risk facing markets into year-end. Note she refused to talk about the US election race and potential for a Trump US presidency.

US markets rallied yesterday with risk sentiment returning on the back of Janet Yellen’s speech. Her words indicated the Fed has reconsidered its stance on a summer rate hike, yet she wasn’t unduly worried about the US economy and sought to advise people not to read too much into last Friday’s jobs number (anomaly?). We also heard from her subordinates Dennis Lockhart and James Bullard who helped to put the idea of a June hike to bed. Note the Fed is now in its traditional blackout period ahead of the 14-15 June FOMC meet.

Suffice to say that last night’s words were taken as a positive - half because there won’t be an imminent rate hike (yay! cheap money for longer) and half because the US economy is still seen healthy despite last week’s minor data setback.

Crude prices are positive this morning with Brent back above $50 and WTI trending up towards similar levels. Oil, as ever, tracking risk appetite in equity markets, while bulls are still taking profits around current levels which makes for a somewhat choppy environment. Consensus seems to want more clarity on US monetary policy. Note Genscape expectations for another US stockpile drawdown this week.

The USD Basket is indecisive back around 11 May levels which is helping to at least keep Gold supported in a narrow range between $1240 and $1250. Not much in the way of Fed-based US Dollar drivers now that the FOMC is in blackout, which leaves raw US macro data and Brexit-inspired safe haven demand as Gold’s keepers for the next week.

In focus today will be Eurozone Q1 GDP seen confirmed at a solid 0.5% QoQ and 1.5% YoY, near its highest since early 2011, but the annual figure looking like it may have plateaued which will be a concern for ECB President Mario Draghi given all that he and his cronies at the central bank are throwing at the region in terms of stimulus aimed at reviving growth and inflation. 

Thereafter it’s back to US data watching with Non-Farm Productivity and Unit Labour Costs both expected to add to the weight of recent data being monitored by Janet Yellen, the former confirmed negative in Q1 and the latter edging back for its final Q1 read. Economic Optimism is forecast to have edged back in June much like Consumer Confidence.

We have a handful of ECB members slated to speak again to keep us occupied while their Fed counterparts go quiet on us (a welcome absence?) in their usual blackout period on communication in the run-up to the FOMC meeting and Monetary policy update next week.

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

• WYG Plc names Iain Clarkson as chief financial officer
• Dewhurst says half year pretax profit -24%
• Shell to exit up to 10 countries after BG deal
• Royal Dutch Shell updates BG deal synergies target to $4.5bn in 2018
• ICAP “confident” will get CMA clearance for Tullett Prebon deal
• Good Energy to raise £3.1m stg in share offer
• Gulf Keystone says Kurdistan regional govt settles April payment
• Novatti says UK unit has secures an agency under an e – money license
• Schindler Holding to establish a new joint venture
• Jaguar Land Rover May retail sales +18%
• Insurer esure says considering demerger of Gocompare.com