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

UK 100 Index called to open +5pts at 6755, having bounced from 6740 yesterday to reinforce intersecting support that dates back to 4 Nov. An overnight foray as high as 6780 demonstrated appetite for recovery towards 7000, although for now we remain in a sideways 6740-6850 channel. Bulls need to see a break above 6780 overnight nights. Bears are watching whether rising support at 6745 holds up. Watch levels: Bullish 6785, Bearish 6730.

Another positive start, albeit again muted, comes after a flat Asian session that follows a weak US close. A rampant Dollar Index hitting 13yr highs remains the market focus given the impact on commodity prices, especially oil which remains both weak and volatile ahead of the end-month OPEC production-cut meeting. It also pressures emerging market currencies, notably China’s renminbi which the PBOC is having to allow trade lower versus USD to maintain competitivity.

Japan’s Nikkei is flat on account of the Yen trading below yesterday’s worst levels vs USD in spite of a surprise BoJ plan to buy unlimited bonds at fixed prices to temper rising yields. Australia’s ASX is only slightly higher due to Oil price volatility hurting Energy and Miners still under the cosh from lower metals prices, now well off prior highs inspired by the US election result and Trump infrastructure spending plans coupled with a fresh round of speculation by Chinese traders.

US equity markets saw a seven day Trump-inspired rally fade as oil price volatility and weak financials offset gains in technology (both reversing recent trends) that helped the Nasdaq close in the green while the Dow and S&P fell. Apprehension about what Yellen will say in her testimony this afternoon and what Trump will ultimately do in terms of appointments and policy would appear to be taking hold.

Crude Oil prices saw a welcome bounce yesterday thanks to production cut hope comments from Russia (just after the US announced a huge inventory build!) ahead of the OPEC meeting at month-end. Both US and Brent are already off their best levels, Brent Crude still battling a trend of falling highs since mid-October that checked yesterday’s jump at $48/barrel, but the US has made progress in terms of a breakout to $46.

Gold is flat around $1225, albeit still with shallow rising lows, still deciding whether it is prepping for a reversal and breakout to $1235 or whether it is destined to go lower. Strong USD makes the safehaven mental more expensive, while equities holding near highs and Trump optimism are holding back safehaven interest.

In focus today will be Fed Chair Janet Yellen’s testimony before the Joint Economic Committee in Washington, especially in light of Trump’s election win, the rise in inflation expectations derived from his policy plans and markets now pricing in a Fed rate rise next month.

Macro data of note includes UK October Retail Sales and the potential for a forecast growth rebound to suggest all is fine and dandy this Autumn, in spite of the referendum, everyone out buying heavy coats as the cold starts to bite in the run-up the key Christmas period.

Mario Draghi will be relieved to see the annual rate of Eurozone Consumer Price Inflation (CPI) continue its northerly march, even if October’s change has slowed.

In the afternoon, US Consumer Price Inflation (CPI) is seen accelerating but note both UK CPI and US PPI having surprised to the downside this week. Any marked acceleration in Real Average Weekly Earnings may add to inflationary expectations already elevated via Trump’s spending plans. US Building Permits are seen climbing strongly again while Housing Starts rebound, however, the Philly Fed Business Outlook is expected to lower for a second month.

Other speakers include the ECB’s Mersch this morning at the 19th Euro Finance Week in Frankfurt. The afternoon also has the Fed’s Dudley giving opening remarks on International Macroeconomics and Finance at the Global Research Forum being hosted by the New York Fed.

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

• British lender Close Brothers' Q1 boosted by banking unit, market maker
• Great Portland Estates cuts full-year rental growth forecast
• South Africa's Investec says half – year profit up 20 percent
• Britain's Royal Mail raises cost savings target, says first – half performance in line with expectations
• Royal Mail Posts Fall in Profit; Ups Dividend
• Kier Group says on course, encouraged by government infrastructure moves
• Ted Baker says performing well, remains confident
• Majestic Wine first – half sales rise 13 pct
• Premier Oil agrees new lending terms in exchange for control over project sanctions
• Premier Oil says expects to deliver within FY production guidance of 68 – 73 kboepd
• Johnson Matthey raises interim dividend by 5 pct, says H1 sales and pretax profit up 5 pct
• Zurich Insurance ups dividend target as it cuts more costs
• CRH earnings up 14 pct to end – September, guidance unchanged
• Close Brothers makes "very good start" to fiscal year
• Investec Plc H1 ongoing operating profit fell to 315 mln stg
• WS Atkins First-Half Pretax Profit Fell 58%, Maintains Guidance
• QinetiQ 1H Pretax Profit Rises, FY Outlook Unchanged
• Oil prices fall on U.S. crude stock build, OPEC remains in focus
• Rio Tinto Shares Steady on Executive Firings -- Market Talk