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

UK 100 called to open -5pts 6815, still under the thumb of what is now a 3-week falling channel. This is after it sold back from 6850 yesterday and failed to hold above 6820 overnight. Some support may be lurking at 6808, but the trend of falling highs since yesterday’s peak looks like wanting to engineer a full retrace to the 6740 channel floor or at least last week’s lows of 6770. The Bulls are looking to get back above 6820 while the Bears are watching for any retest of 6800. Updated watch levels: Bullish 6825, Bearish 6795.

Called to open slightly offside, equity market sentiment is being driven by US losses and another mixed session in Asia overnight. USD strength derived from increased odds of a Fed rate rise continues to weigh on the key commodity space (Oil, Metals, Miners, Energy). Australia’s ASX is thus underperforming although we note raw material prices off their worst levels. In contrast, a weaker JPY (August highs for USD/JPY) is helping Japan’s Nikkei, especially its currency-sensitive exporters.

Jackson Hole may be out of the way for another year but another muted market open suggests investors back data-watching, now focused on Friday’s Non-Farm Payrolls and US Jobs report. This is a result of Janet Yellen (and Fed FOMC peers) being clear that further US interest rate rises are data dependent. This means we’re back to deciphering whether good data is indeed good (implying economic recovery) or bad (another step away from easy monetary policy).

US stocks ended lower Tuesday with hawkish Fed commentary keeping market optimism in check along with a stronger USD. The resurgent Dollar is benefitting financials though, with that sector the only outperformer on the S&P500 yesterday. Data is also playing into the hawks’ hands (or is it wings?) once more with US consumer confidence rising to its highest level since Autumn 2015. Noted victims of Dollar strength continue to be commodities and their respective miners.

Oil prices are out of favour this morning with a stronger USD hampering the commodities space as a whole and US stockpile data yesterday (API) indicating that inventories are once again growing - especially distillates. There’s more data out today from the EIA which is again forecast to post a rise…

Gold has retreated to the floor of its 2-month sideways range which could preclude a bounce back up towards $1360. Technicals, however, appear to favour a test and potential break below support $1310 on a stronger USD and with investors still very much favouring the chance of better returns from equities.

In focus today: German Unemployment is seen slightly improved (smallest since March) but not enough to bring down the claims rate. The rate for Eurozone Unemployment is, however, seen edging further lower to over 4.5yr lows, while it is hoped that headline Eurozone inflation will have ticked higher and the Core measure held firm.

In the afternoon, watch out for US ADP Employment, a jobs-related data point often viewed as a warm up act for Friday’s US Non-Farm Payrolls. This is especially important given Fed Chair Yellen’s message last Friday about further US rate rises being data-dependent.

Although the Chicago PMI is seen lower in August, at odds with the Chicago Fed Nat activity index, US Pending Home Sales growth is expected to have accelerated nicely in July. With oil on the back foot and after that surprise US Crude stock build  last week (and API last night), US EIA Oil Inventories will be the data point to close the day.

Central bank speakers include the Fed’s Rosengren, Evans and Kashkari, possibly echoing Chair Yellen’s Friday’s talk, although with USD strength suggesting increase market hawkishness, there may be room for some dovishness to even things out.

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

• HSS Hire says Q3 trading started ahead of last year
• Gulf Marine Services H1 revenue rises, maintains FY guidance
• Gulf Keystone launches open offer to raise $25m
• Oil dips on stronger dollar; rise in U.S. crude stocks data
• British house price rises pick up speed in August – Nationwide
• Ladbrokes says Coral's current trading is positive; Coral 3Q Revenue Rises
• 888 first – half pretax +39%, says Q3 started well
• Hiscox completes sale of HK division of Directasia
• London copper faces 6 pct monthly loss in August
• AstraZeneca to pay $5.52m to resolve US SEC foreign bribery case
• BHP Scraps Chief's Annual Bonus -- WSJ
• FAIRFX Group Partners with VizEat
• James Fisher 1H Pretax Profit, Revenue Hit by Lower Offshore Oil Activity
• Diploma Expects 14% Rise in FY Revenue