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FTSE falls below 6100

A surprise cut to inflation forecasts by the RBA send the Aussie dollar reeling with AUDUSD sliding over 1% in the aftermath. Many now speculate as to whether there will be another rate cut in the offing next month. 
The Aussie now resides near a 2 month low with 3 year bonds exchanging hands at record low yields.

Asian markets overall have finished up the week on a fairly sour note. Tokyo re-opened after the Golden Week holiday and then Japan joined the sell-off. The supply disruption concerns of yesterday seem to have been put on the back burner today. Oil is down by 1% as the resurgent dollar and plunge in Chinese commodities eclipses the output cuts in Canada. According to the latest, Saudi Arabia may well increase its output at very short notice if a deal is not reached in June meeting.

As we have come to expect on payrolls day, there is a notable caution in risk assets this morning ahead of the much anticipated Non-Farm Payroll release. Expectations are fairly positive. The consensus is that the US added 200, 000 jobs last month coupled with 2.4% growth in wages. Some of the top forecasters are rather optimistic with some calling for 240,000 jobs It is worth keeping in mind that US corporates have produced  a fairly  poor earnings season Q1, the GDP growth figure has been revised sharply down to 0.5% from 1.4% and the latest ADP employment report has been a clear miss.

St. Louis Fed's Bullard, noted hawk spoke yesterday and essentially reiterated that there remains an enormous chasm between market expectations and the Fed’s own predictions for future rate hikes. Global headwinds, he added, seem to have waned and that the ‘Brexit’ referendum does not pose any real risk. This is in stark contrast to the viewpoint of Fed Atlanta Head Dennis Lockhart who has recently stated that: ‘’ Brexit could be a source of heightened global uncertainty ...  (it) has some potential to loom large as we approach the June meeting."

So not exactly great clarity or agreement between the various Fed members – but what’s new?

Caution in capital flow this morning with only utilities in the green and materials, energy and telecommunications out of favour. Gold prices are marginally higher and seem hell bent on making a fresh stab at the $1300 mark.; Fresnillo (+1.35%) and Randgold Resources (+2.68%) take the top spots on the UK benchmark as a result.

We call the Dow lower to 17637.