After the US GDP we are naturally slightly concerned as to the apparent disparity between the UK and the rest of the G7. The French and Germans came out of recession in the 2nd qtr the US the 3rd (with a really swashbuckling 0.9pc bounce) and yet the UK was seemingly still in the doldrums and while we might expect some revision of the UK numbers to the upside the perception is that the 4th qtr is hardly going to be stellar either.

As mentioned in yesterdays comment we are rather concerned at the continued weakness in the M4 money supply numbers which are indicating contraction at the worst rate since comparable data has been available. This means that we are expecting to grow out of a recession whilst experiencing a negative money supply number. The word ‘unlikely’ springs to mind.

The FTSE has opened pretty much unchanged this morning after looking like putting on 20 pips at the US close last night and we might now be in a situation of being stuck between the 5040 support mentioned yesterday and the 5165 resistance (was support on Wednesday) level where we failed at overnight. Our clients had an absolutely great day yesterday as the bounce came to the aid of Wednesday’s pressurised buyers but there is now a sense of ‘what next’ and most traders have lightened positions considerably going into the weekend.

Lloyds have indicated that they will be issuing a deeply discounted rights issue and this has given the stock a bit of a fillip as investors, keen to get in on the cheap stock, have been buying. This coupled with some more comforting clarity over the EC commissions deliberations on possibly breaking up Lloyds and RBS seems to have translated into a bit of a bear squeeze as shorts scramble to cover.

Equity support remains reasonably strong but with winter upon us and the natural contraction in activity this will entail (coupled with the beginning of the end of State fiscal injections) the upside looks difficult to chart. As we mentioned a few weeks ago 5300 looks to be a difficult level in the current situation for the FTSE to break above. We really need some good growth news in both Europe and the UK to whet the appetite once again.

There is a bit of data due this afternoon from the US but after the excitement of yesterday and Wednesday we may have had our fun for the week.

In the currency markets traders took the weak inflation numbers in the GDP as a trigger to sell off the dollar pushing Cable briefly up to the top of the trading range above 1.6600 and the Euro back above 1.4800 where we remain this morning. Sterling remains popular for the moment and it is difficult to be too negative on a technical viewpoint as the downside is definitely an unproductive area for the moment.

The Euro continues to hold (in the main) to its gains over the last few months but the upside is beginning to look more difficult. Longer term investors, who have been piling into the Euro as (it almost seems) a quasi replacement for the Chinese Yuan, are pausing for breathe at the moment and it might be interesting to see what will happen if European growth starts to look less optimistic. The currency is overvalued by most measures and, while this state of affairs often continues for long periods where currencies are concerned, the swing backs can be very exciting indeed.

Oil as feared in yesterday’s comment regained the front foot as 80 bucks beckoned once more. The boost to the equity markets and the weakness in the dollar both combined to drive it 250 cents to the upside. This morning there is, as with nearly every market, a pause and although the bulls are maintaining the upper hand throughout most of the sessions recent trading has built two barriers, at 80 and 82 dollars, where non existed before. Technically there was little resistance between 75 and 90 dollars on Nymex (a small resistance at maybe 85 bucks) and many longs were hoping for the big rally to continue unabated until at least here. Unfortunately this has not occurred quite so smoothly and we are now sitting rather less comfortably than before just under the 80 mark. The bulls still have it but the probabilities are not quite so one directional as before.

And so we move onto precious metals where the Gold is attempting to maintain (this morning) its regaining of the 1045 to 1065 trading range in yesterday’s session. In truth selling looks muted in early action so a sell off looks unlikely just for the moment but traders will want to beware another move below 1040 which might trigger a belief that the highs for the time being have already been seen.