Finally the crux of the election campaign has got underway, and last night’s debate between the leaders of the major parties made for compelling viewing.  Gordon looked ridged and uncomfortable, with David Cameron giving the air of having the higher moral ground; meanwhile, his little brother played off both of them smoothly to come out on top – at least according to all the polls released afterwards.

These three way debates will only serve to benefit the Lib Dems, who have little to lose and can build support from a very low base.  When few in the country even know who he is, last night and the next two televised debates will increase his status from an unknown and as a result, voters could be tempted to put their cross in the yellow box.  Whilst the Lib Dems have the sound bites that might show they offer a viable alternative to the main parties, when you look at their policies as a party, they are positioned even further to the left of Labour.

Last night saw a good run higher by US markets and at one point we were calling the FTSE as high as 5840, but disappointing Google numbers after the close last night led to weakness in Asia setting in, so we’re more likely to look at profit-taking as opposed to further gains this morning and we see the FTSE trading back around the 5800 level.

However, over the last few days the risk trade looks to be back on with the FTSE, making a new one-and-a-half-year high yesterday, following the strong Chinese GDP numbers.

A little profit-taking in EUR/USD and cable allowed the dollar to recoup a little of its recent loses, but the reversal was minimal.  The 1.3600 level for EUR/USD has proved a bridge too far for now and so we’ve dipped back below the level trading at 1.3525 this morning.  1.3500 is the obvious support area, where the rate had gapped up from over last week end and then below there, the figures should lend support so 1.3450 and 1.3400.  To the upside bulls will focus on 1.3690, the most recent high so far this week.  The recent move for EUR/USD has led it to break above the upper downward trend line and the double-bottom formed in the last month is giving the bulls the upper hand at the moment, but it’s still early days to say that the decline of the euro is over and bears will still have 1.3000 in their sights.

Cable’s also benefiting from the renewed appetite for risk and also the most recent poll showing the Tory lead in the polls strengthening.  The polls are definitely having an effect on the fluctuations in sterling and last night’s debates between the political party leaders have served to muddy the waters a little, making a hung parliament more likely and causing some weakness in sterling this morning.  The recent high 1.5525 is near-term resistance and if we get beyond there, the big hurdle is 1.5650, which is around the low marked in October last year.

Gold once again found support just when it looked like the recent run of strength had come to an end.  A dip to 1150 was welcomed once again by further buying and assisted by the strong GDP numbers from China.  This morning gold is at 1153.5, with key levels see at 1170 and 1184 to the upside and 1145 and 1159 to the downside.  Any further strong economic numbers, particularly from the big emerging economies, could help to support gold and bulls will be eyeing another run at 1200 at some point this year.

Crude couldn’t replicate the mini recovery move by gold, and we continue to hover around the highs at $86, with bears expecting a decent move to the downside from these highs.  Like gold, crude should benefit from improved economic data and the uptrend for the energy market is still very much in tact, but that doesn’t mean that sharp moves to the downside do not happen as we’ve seen in the past.