Interesting movements in the currency markets are just about the only thing worth focussing on at the moment as the Dollar waxes and wanes, yesterday managing a strong rally and then an even stronger fall.

Once Cable had broken back above 1.5930 (the resistance level mentioned yesterday) the move was all one way and we are now sitting above 1.6100 with everyone wondering what all the bearish worry was about. There is some solid resistance at around 1.6150 where we actually peaked early this morning and minor volume from 1.6115 up to 1.6150 as well. On the down side we are back above 1.6070 and 1.6030 which proved to be supports in the past so we can probably speculate that these will prove as such again.

Sterling has made something of a recovery versus all the majors in the last couple of sessions as signs of a pick up across the economy seem to become more evident. But the main move yesterday was definitely one of a Dollar and yen weakness.

Yesterday’s falls in the equity markets are being quickly wiped out this morning with the FTSE opening up at 5430 and shorts are looking a little nervously over their shoulders. The last day of the year is either very, very, boring or wildly variable and we would probably only need the FTSE to climb to around 5450-60 to start some weak short covering in a thin market. The Dax closed for the year yesterday at 13.00 (it is not open today although we are quoting an out of hours price) but the last few minutes saw a 30 point swing to the downside even though the FTSE, Dow and S&P were gently swinging higher at the time.

This is just a small example of some of the weird events that can occur as we get near to the closing bell on the last session of the year. Dealers with positions that they cannot hold over the year end are forced to trade and if there are too many trying to buy or sell they can shift the price alarmingly in the thin markets.

Oil had a wild day as well yesterday as the Inventories were weaker than expected causing a quick rally then a big fall then a big rally..and so on. Today the market looks comfortable above $79.20 but pressure on this price might move us back to the support at $78.40. Above here we have resistance at $79.75 and (of course) 80 bucks and $81.50. Clients are short and loking for a pull back but it must be said that just as the market looked weak for the first half of December it has been very strong for the second half rallying for 11 of the last 13 sessions.

Gold has bounced back from the lows again on the back of the sudden weakness in the dollar. It is difficult to get too much of a handle on the current direction of the yellow metal but it must be said that if it is relying on Dollar weakness for support then the overall outlook is possibly bearish as the Greenback (whilst not exactly strengthening) will hardly weaken every day. Trend supports are rising by the session and the major supports are now at 1085 and 1050 with solid resistance at 1112.5

With few reasons for taking new positions today we should expect a quiet session in our dealing room so it just leaves me to end this very short comment with