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

UK 100 called to open flat at 6815, pretty much unmoved since yesterday mid-morning, investors adopting their usual holding pattern and eschewing risk ahead of a Fed speech. The index remains in its 2-week downtrend after yesterday’s foray south to 6780 to extend the channel floor. The Bulls will be looking for a breakout at 6820 to allow for a test of the channel ceiling. In contrast, Bears will want to see 6800 give way. Updated watch levels: Bullish 6830, Bearish 6800.

A rather subdued opening call is nothing out of the ordinary given the event risk attached to Fed Chair Janet Yellen speaking in Jackson Hole this afternoon. This because she may (only Dixons offers guarantees) deliver a cryptic hint or two about the timing of the next US rate hike. Which is important with peers doing the opposite and USD strength having a negative knock-on for commodities. Note however, the USD back trading around yesterday’s lows, suggesting fears of a hawkish rhetoric may in fact be on the wane. Could it all be much ado about nothing?

Whilst risk appetite is likely napping until this afternoon, Japan’s Nikkei underperforming on account of a weaker USD and thus stronger Yen hindering exporters. Data suggesting Japan going deeper underground in terms of deflation is not helping either. Might this tip the balance for the BoJ and mean more intervention the week after next? Australia’s ASX weak due to still weak metals prices although this may be beginning to reverse thanks to the USD backtrack (Copper & Oil bounced, Iron ore still weak).

US markets finished lower - again suffering from low volumes and losses in healthcare amid fresh political controversy around drug pricing. Hawkish Fed chatter from Esther George, John Williams, and Stanley Fischer helped to set the tone ahead of this afternoon’s speech by Fed Chair Janet Yellen - at which she may act to neutralise recent hawkish statements, not wanting to put anything definite in the minds of market participants so as to avoid the ‘imbalances’ so many Fed members fear. Note however that a meeting has taken place between Fed members and campaign group ‘Fed Up,’ whose aim it is to oppose any policy tightening. The debate rages on.

Oil prices have gone higher with Brent crude hitting the ceiling of its narrowing range overnight, resistance thereabouts holding to see a pullback below $49.5. Saudi Oil minister al Falih not believing the market needs any intervention could see the floor tested around $48.8.

The USD has been in limbo this week and should continue to be so as we approach Yellen’s speech later today. Small moves are nonetheless being reflected in the gold price with a light southerly move by the USD engendering a breakout above the 20-hour moving average for Gold. Note the possibility for Yellen to balance the more hawkish tones of late with some reassuring dovishness, which could weaken the USD further, although there’s plenty of room for her to reinforce a hawkish message. 

In focus today - aside Janet Fed Chair Yellen’s speech at 3pm - will be UK Q2 GDP. The second estimate for economic growth in Blighty is seen confirming a rise of 0.6% vs Q1 and 2.2% over the prior 12 months. Any disappointment might fuel hopes the Bank of England might have to cut rates again, or boost stimulus even further, to counter a slowdown that could yet worsen in light of Brexit. There’s lots of data to the contrary so far, but it’s likely still too early to be absolutely sure. The key Index of Services (80% of UK GDP), however, may have seen growth improve in June.

In the afternoon the second estimate for US Q2 GDP is expected to show a slightly slower pace of growth than first thought, but still confirm strong gains for Personal Consumption and solid Inflation that will likely be pounced upon by officials as evidence that that another stateside rate hike is warranted. Soon. But not quite yet.

At the same time as her majesty Fed Chair Yellen takes the podium to enlighten us on how global monetary policy should evolve post crisis, and maybe drop a hint about when her and her FOMC cronies might next hike rates, US Consumer Sentiment is seen relatively unchanged in August.

And that's a wrap for the week. Unless you're exposed to oil, in which case keep an eye out for the latest US Baker Hughes Rig count for clues about oil production on the other side of the pond., especially amid a global supply glut.

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

• San Leon Energy Raises £170M to Fund OML 18 Nigeria Stake Purchase
• Egypt's Tourism Looks Up as Airline Plans Service Restart -- WSJ
• Restaurant Group 1H Profit Hit by One-Off Charge; Keeps FY Target
• Computacenter Sees Modest Rise in FY Adjusted Profit
• Segro Sells Industrial Estate for £79.5M
• Avocet Mining says still in financing talks for two projects
• Marshalls says Brexit has not impacted underlying trading to date
• Marshalls Half Year Earnings Up; Sees 2016 in Line