UK markets continue to look reasonably stable although off their highs of yesterday as the Dow and S&P failed to make any headway in late action last night. The Mid 10400’s is proving something on a stumbling block for the Dow at the moment as continued attempts to scale the peak have proved abortive. The strength of the dollar at the moment is not helping either and with the US consumer apparently turning a bit more cautious the growth scenario of the last quarter of 2009 may prove difficult to sustain through this year.

In the UK the services sector numbers surprised to the upside and banner headlines have screamed the end of the recession once again. Unfortunately the Tax Revenue numbers (in the end the final real arbiter of strength or otherwise) have actually been moving in the other direction as the Budget deficit seems to worsen on a monthly basis and one fears that yesterday’s services number may be one in a series of false dawns. On a purely personal basis it has been marked how much easier it has been to get a seat on my train in recent months. A purely subjective measure admittedly but if London is still losing jobs then the rest of the country is unlikely to be doing much better.

The FTSE is opening at around 5510 this morning off about 25 points but there appears to be little other follow through from the 100 point odd drop in the Dow since the UK close yesterday afternoon. Support will probably focus on the previous resistance of 5445/5460 and lower at 5365/5380 but these are some way off at the moment. More dealer eyes will possibly be o the up side with 5510 (where we are now) the first barrier and 5530/5550 the major bar to further appreciation. It must be remembered with caution that the index rejected the plus 5500 level quite dramatically back in January so dealers will be cautious of being seen to be over bullish.

On the currency market the pound and euro both found support yesterday pushing well away from recent lows to climb quite strongly through the session. This morning a bit of profit taking and new short building seems to be in the air and sterling is still below 1.5140 which had been support and now turns into resistance. Yesterday we reached a high of 1.5130 before falling back but 1.5015-1.5030 is currently holding steady and technical traders will probably be lightening any shorts just in case this support turns into a platform for another bounce.

It must be admitted though that the trend for both the Euro and Sterling is negative and most traders are seeing any rallies as new selling opportunities. It will need more than a few votes of confidence in Greece to reverse the overall flow. The Euro remains over valued on a trade weighted basis as Far Eastern buyers will continue to look for a liquid alternative to Dollars and we can see the enthusiasm for the currency every time there is a vaguely positive piece of news. This makes it a difficult unit to really get too negative about in the short/medium term but in the end currencies tend to be dragged back to parity (and lower) so for those who are able to take the ultra long view the bears will continue to have their champions as well.

Gold continues to rise as woes elsewhere encourage the ‘currency of last resort’ pundits but yesterday the rally petered out at the Mid 1140’s yet again. We had a frustrating time through January where (apart from one very short lived burst) 1142/1145 proved a bit hard to bust through. For those who like history to repeat itself 1120 would be the next target to the down side but it must be said that at the moment bearish retracement moves seem very long drawn out while rallies are very quick, which for many is a good indication of underling pressure to the up side.

Oil is also back up at resistance levels with 80.50/81.00 continuing to bar progress. Day traders have made hay over the last few weeks as the old 77.50 to 81.00 range has held court. Now we are back near the top ($80.35) we are seeing sellers creep out of the woodwork once more. If dealers wish to join them it would probably be wise to set stops very close.