Most Markets traded almost exactly in the defined ranges yesterday making our clients a happy bunch.

The FTSE helped by the Citibank numbers bounced off of 5430 all the way up to resistance at 5530 and then retraced from here. Easy if you know how!

Gold has traded the 1130-1142 range (mentioned yesterday) all of four times yesterday and Oil also obliged with a bounce from $77 all the way up to $79.50 and now back down to the mid point at 78.50.

The currency markets were the only real stand outs with the Euro being the bad boy weaking under the continued glare of worries over stability. Oddly enough the major players in the Union will probably be rather pleased if the Currency can take a back foot as the strength of recent years has seriously impacted export growth.

The FTSE is opening this morning just back under 5500 as dealers take the aforementioned profits on anything above the 5500 line. This said, Goldman’s comments are very persuasive and the opportunity for a further serious equity rally cannot be ignored. The real worry though is the sudden resurgence of the Inflation genie. While economists had forecast that inflation would increase over the next few months the sudden 1pc in one month shift was certainly not expected. If the BOE is forced in action on the interest rate front UK exposed corporates might come under pressure. Not only this but all those expensively bought QE bonds will fall even more in value making the Treasury’s foray into Gilt buying very, very expensive indeed.

All of this might put pressure on equity returns and this will almost certainly keep something of a cap on any big rally until some of this uncertainty is removed. Of course there is always an “on the other hand” and this one is the rather boring fact that equity returns even at these ‘high’ prices are better than you can get almost anywhere else which makes a dramatic fall in an improving economic situation equally unlikely. The FTSE maintains support at 5440/5450 and resistance between 5530 and 5565.

The Dow is of like mind but without the inflation worry of such magnitude. Support is at 10550/70 and resistance at 10700/30. The current price at 10680 puts us just under the resistance barrier and with the PPI numbers due this afternoon traders will be fearful that UK price inflation might be mirrored in the US. If the number is weak there is a chance of the resistance being attacked and if it breaks we would be in new territory.

Currency markets are seeing the low for the Euro since September last year but we have (at least temporarily) held support at 1.4170. We are still very close to this though at 1.4190 and the fear is that there are very large long investment positions out there who are now well underwater. The story of the weak dollar and the peg against the Chinese Yuan had funds pouring into the Euro as a quasi Yuan/Dollar hedge and if this argument begins to break down due to EU hegemony issues it is not wild to speculate on a return to the 1.27/1.30 support/volume area.

Cable has now come off from the rally high of 1.6450 reached yesterday after the inflation number raised hopes of earlier than expected rate action and the cross has fallen all the way to 1.6250 in morning action. 1.6150/1.6200 to 1.06400/1.6450 has proved in the past to be a sort of neutral area when nothing much is going on and it is tempting to speculate that we might operate in this area for a while.

Gold has bounced off the same support level (1125/1128) as in previous sessions and we are now at 1132. This type of activity seems to be almost self fulfilling and it is easy here as well to be tempted into saying that 1125/1128 and 1140/1142 will prove to be the range once again. The dollar is beginning to regain overall momentum though as sell offs seem to be quickly reversed. When the huge fiscal liquidity in the US starts to be curbed dealers will have to keep a weather eye out for a possible weakening attraction for the Yellow Metal. At the moment global fears still hold sway but the props (low interest rates, weak dollar, financial fears etc) are all being eroded slowly away.