Markets obliged our clients yesterday by giving up at the 5735/40 resistance levels in the FTSE and retracing back down to the 5650/60 support (both levels specifically quoted in yesterday’s comment), and with the majority of our clients selling the highs of the range and buying the lows, there will be quite a few happy punters out there this morning.

Today sees the FTSE opening slightly to the good at 5685, in the middle of the current range. This being the last day of the first quarter, we cannot really expect much in the way of fireworks and as mentioned in previous comments, the four-day break (with a Non-Farm Payroll figure release in the middle of it) may well cause some position lightening from short and medium term traders. The aforementioned barriers are still in place and traders will be keen to try to play the range again if the opportunity arises. At this moment, any break out looks unlikely as sizeable contrary positions are unlikely to be in place.

The Dow also continues to oscillate around the 10900 price level and the bulls will be hoping for a reasonably prompt attempt at the very tempting 11000 level over the next week or so. The longer we hang around under 10950, the greater the likelihood of a pull back gaining momentum.

Equity markets overall continue to look the best bet for investors, as debt levels (both corporate and sovereign) get ever higher, but we must beware the effect of rising bond returns on the attractiveness of equities. While shares may ‘outperform’ bonds, this does not mean that they cannot go down.

Currency markets were also very technical trading friendly yesterday, with the Euro failing to make headway above 1.3500; the Pound ditto, above 1.5110/15 and the Euro/Yen above 125.25, although they all gave opportunities to get short at these levels. The weakness of the Euro and Yen was quite marked through the session, but there appears to be no appetite to take the Dollar much higher just for the moment. This said, there has been no convincing bounce in either the Euro or Yen, and dealers may be wary of getting too long of either currency given the ongoing strength in the Greenback. The Usd/Yen is now back up at the highs for year, where we failed to make headway back in January, and rumours of the death of the Dollar hegemony (which were rife just a few months ago) now seem very far from the mark.

Cable remains solid on the back of the better than expected UK GDP revision to Q4 last year and dealers seem to be buying it up again to attack the resistance levels. Overall, the wider trading range of the cross is unchallenged and we can expect continued activity within this area.

Gold had another failed attempt at 1112/14 before slipping back to a low of 1102, but this morning seems intent on regaining the highs once again. At 1109.5, there seems little to attract either the bears or bulls and our clients are very much two-way.

Oil has been stuck below 83 for a few days now, BUT on the other hand is not retracing, so clients are looking rather more positively than in times past when this was seen as a shorting level. With inventories due out this afternoon at 15.30, all eyes will be focused on the screens at that moment.