FOMC decided on no change and added to this with generally cautious comments on growth potential due to the travails over in Europe. This translates into a dovish outlook on interest rates to go with the current weakening in the potential for higher base rates in Euroland and the UK. On the other hand there was a small palliative from Bernanke on hopes that Chinese and general Asian growth will lead to support for the US economy.

The FOMC raised issues over inflationary pressures as well (although very quietly) and this must be something to be watched for long-term traders. Inflation has been driven down by 15 years of low cost imports. Everything from computers to trainers have fallen in absolute cost over the period, but now we are beginning to see substantial wage growth in the Asian region from factory employees to professionals and this is likely to mean (in the long-run) higher consumer prices in the West. This may well be accelerated by the endemic deficits entrenched in most Western nations dragging down currency values, which should prove advantageous on the Export front but grim on the inflation one.

This morning sees the FTSE called some 25 points higher back at the 5200 level as Far East markets returned an almost unchanged session (the Nikkei moving by 0.05pc and the Hang Seng by 0.14pc). Our clients are playing the range at the moment (quite successfully) in buying dips and selling rallies. Of course this play will break down eventually as a direction is established, but for the moment it is quite difficult to identify, which way this will be.  On the one hand we have all the woes over sovereign debt issues and squeezing fiscal stance on public sector spending, but on the other corporate news seems reasonably solid.  There is obvious support down at 5160/65 being the low of the last two sessions, 5140 and 5085/95 and resistance at 5210/15, 5250 and 5290/5300.

The Dow is also starting to worry a bit, as the rejection of the 10600 level is looking more decisive by the day. It would not take much more of a sell off for traders to start talking of the Mid-June rally in US indices as a short squeeze or dead cat bounce. We really need to hold firm over the next few sessions or even put a bit on the gain side, if we continue to slide then confidence may well start to crumble. Over everything hangs the spectre of the massive debt mountains from private to corporate and on into public sector. All of the policies enacted over the last couple of years have failed to dent this in the slightest.

On the currency side the Pound is looking nicely powerful with the MPC vote giving bulls the hope for higher rates sooner than expected. Cable has had a go at 1.5000 overnight failing at 1.4999/1.5001 (!) on our quote but the failure to make headway is being punished as I write with sellers pushing us down to 1.4935. Since the Budget speech the direction has been generally bullish (we were just under 1.4700 as Gorgeous George stood up) and traders have seen any pull backs as opportunities to pick up new longs.

The Euro on the other hand is looking wedded to the 1.2300/50 level. We had a bit of a battle over this general area back in May as the market was getting trashed and we seem to be unable to break back above the mark for any length of time now things are a little more Euro favourable. Once other distractions start to alleviate (the World Cup) traders may wish to be cautious as markets might begin to focus on the European woes once again.

Gold broke the 1234 support mentioned yesterday and immediately slumped to 1124 in just a few minutes, presumably as sell orders were triggered in the futures markets. As always though buy orders then came back into the market to take us back up. The rising trend line that failed yesterday is now at 1138 and interestingly this morning this has proved to be the high point. The price is now at 1231 and looking fragile but bears should be cautious as the attraction of the Yellow Metal has proved very difficult to budge. Press speculation is still almost universally Gold positive and in such a retail investor focused market this is still proving to be decisive.

Oil is also under pressure drifting 2 dollars yesterday and finding no real bounce yet today. There is very good support all the way through the 75 dollar region (as would be expected due to this being the OPEC desired target). This said the continued failure to make much headway and the fact that every month is at least a dollar more expensive that the previous contract we are seeing Oil based inflation even though the ‘headline’ price is not actually rising. Over the last year buyers have paid the equivalent of 15pc inflation on the price even though we are still at the same level as last August.