Nothing much seems to be going on this morning and trading floors are likely to virtually grind to a halt as traders focus ever more keenly on events in South Africa this evening. There is some data out at 09.30 on money supply (M4) which is (economically) actually quite important but these days has virtually no impact on markets.

We had become used to M4 figures being up above 10pc through recent years but with the various constraints to lending still influencing banks (regulatory, capital requirement, natural reticence to lend in a recession etc..) this has now drifted down to close to 3pc YOY. Although we do not comment a great deal on the Money Supply data it has been a recurrent theme over the last few years that it would be surprising if a good recovery manages to take place with a falling M4 number.

Also, it was very nice to see that the FSA made a £51 Million profit for the YE Mar 2010. One wonders how they can then justify the massive increase in fees.

As my newspaper tells me this morning, the FTSE has managed seven straight winning days for the first time in a year. Consequently, it is rather surprising to still be reporting the opening quote at or around 5250 this morning. This means that as we started from around 5025 (pretty much the low for the last nine months) the seven day winning streak has averaged just 32 points a session. While this is encouraging, it must be warned that bounces from low points are generally rather more exciting. This will be giving hard pressed bears at least a small crumb of comfort. The entire range of 5200/5400 is a critical level overall, which has seen repeated skirmishes and outright battles fought out over the last nine months. It has proved to be both a support and resistance area and with the current market sitting pretty comfortably right in the middle of it, one does get the feeling that investors are happy with the status quo.

There is pretty solid resistance up to 5300 and support at 5190/5200 (this all feels like déjà vu) and unless some impetus is seen externally, traders do not seem to be expecting much of a break out today.

FX markets are hammering at the Dollar for the fourth or fifth day in a row, but the moves do seem to be treading water a bit at the moment. Above 1.2400 in the Eur/Usd, we are seeing repeated selling from clients and likewise above 1.4820/40 in Cable. Overall, though, the Euro rebound from the lows of 1.1900 is not yet running out of steam. Day Traders keep trying to pick a high and are being squeezed out later in the session as the Euro cross has tended to rally as the day progresses. The cross is now at 1.2375 and an argument could be made for either direction. As mentioned 1.2400/1.2415 is resistance (not that far away) but there is also reasonable support building at 1.2350 as well (likewise not a million miles away). The Euro cross has tended to pick big figures as battlegrounds (i.e. 1.2300 or 1.2350) over the last few months and so traders are tending to await moments around these points to get involved.

Gold continues to grind higher and had another pop at 1250 yesterday. This makes the third attempt in the last 5/6 weeks and our clients are dropping out of some of their longs, but still seem content to play the game from the buy side. On a short-term view, the bulls will be looking for a close above 1250 very soon otherwise the probabilities may start to favour a reversal.

Oil has likewise continued its general move higher, although the expiry/roll of the July contract into the August has added 150 cents to the price. For well over a year now the next month/forward contracts have tended to be at least a dollar higher than the expiring month and this is having an odd impact on our very long-term shorting clients. Although the outright ‘headline’ price of crude has hardly moved in a year a continual shorter would now have booked well over 12 bucks in profit. For those who have been consistent longs over the same period the effect has been the reverse. Overall though we are in a 69 to 78 buck range (although we are right at the top just for the moment) our clients will be eying 78 for a breakout, but they seem content to be short of it just shy of 78.00.