Overnight action has hit the Euro and Pound with the Dollar and Yen roaring away. News from the Greece/EU debate is turning nasty with Greek politicians doing themselves and their country no favours by slagging off the one nation that can come to their aid.

To drag up arguments from 65 years ago and pillory a nation over policies and events that no current living person had control over shows startling lack of judgement. When this is followed up with an attack on the intellectual quality of the leaders of the other EU countries one is left wondering whether Greece is on a suicide trip.

No doubt wiser heads will rule in the end but ……

All the fun and games is making dealers wary of getting too committed to Euro longs especially when, on purchasing power parity, the currency is still overvalued by some 12pc. We might think that it has fallen a long way already but if the bears really get their teeth into it there is no reason to think that it could not go from overvalued 12pc to undervalued 12pc (only joking!).

Equity markets seem to be taking it all in their stride with the FTSE and Dax pretty much unchanged after opening lower on the Far East weakness. Weak currencies often translate into solid equity markets as the woes of the state are not always transferable into multinational corporations.

The FTSE seems content to oscillate between 5310 and 5350/60 and our clients had quite a bit of fun yesterday playing this game. This morning we are likely to see the same activity so traders should be wary of a possible break of these levels. If traders across the market are copying the activities of our clients then there may be scope for a bit of a bear squeeze (if the market breaks 5360) or a bull bash (if we drift under 5310).

In reality markets are yet again stuck in the same tired ranges of November/December (5200/5400) and it is difficult to get enthusiastic about any particular direction. The S&P is similarly stuck around 1100 with excitement rising every time we move away from this point only for disappointment to eventually arrive as the gravitational pull of 1100 eventually gains control. The S&P seems to have a strong barrier at 1115 and, as mentioned over the last week, a lack of appetite in closing above 1110. On the down side 1092 and 1085 are good supports as well and it is difficult to see these being defeated either.

Currency markets (as mentioned) have been the big movers overnight with Cable dropping to a new nine month low on the back of renewed comment on further Quantitative Easing programmes (one wonders how much one country can build up for future problems). Let us not beat around the bush….. QE is ‘printing money’ by any other name, which means that the BOE has printed £200 bln and is intending to issue more. With the economy still in the mire it is not unreasonable to ask the question as to whether this has really had any impact at all. Other countries within our economic sphere, which did not go in for this “build problems for the future”, are faring no worse than us. Not surprisingly the pound is taking the strain.

Gold has drifted back to the bottom of the 1090/1024 range and the 1108 support which was broken on Tuesday turned into resistance which capped the highs yesterday. Clients continue to try to buy the yellow metal but …. Caution should be exercised in case the current weakness turns into a rout. We are on support now and a break might give the sellers room for a run to the next support at 1075/76 but the longer term target for the bears remains 1028/1032.

Oil is still welded to 80 bucks but, as mentioned previously, still seems to get a nose bleed when getting up to $81. With most asset markets still reasonably solid the buyers still (just about) have the upper hand but bulls will be concerned at the ease with which each rally is beaten off.