For the first time in a while, we can finally a sense of spring in the step of shell-shocked investors as the feeling continues to permeate through that the worst may be over. Strange as it might sound, from the view point of the stock exchange, this is not as weird a proposition as you might think. Whilst the actual effects of all of the problems that have reared their ugly head over the past eight months have yet to be felt, professional investors spend their time trying to see a year ahead. There is not much point in waiting for absolute confirmation of a change in the financial landscape, as by then the stock market would have already rallied/fallen in anticipation of the event and you would be buying/selling at the top/bottom of the cycle.

Yesterday saw both the BOE and ECB hold steady on rates and whilst I was slightly surprised (short for 'got it wrong'), if you turn your head sideways and squint through the bottom of a dirty glass you can just about see their point of view.

Gold moved up to the resistance level mentioned in yesterday's comment at $882 and we are opening at that level this morning. With the Dollar weakening badly against both the Yen and the Euro in yesterday's sessions, the rally was not unexpected but we are still struggling to make new highs on the current 'wave', and there are significant resistances at the falling trend-line (currently at 895), and of course, at $900 (just because it is a big number).

Whilst the temperature appears to have gone up a bit in recent days, with big rallies in the FTSE, it is really rather early to be calling for an end to the fears over growth, and both the MPC and the ECB will be sorely tempted to react to the increased prospects for a slowdown, and in the process, damn the inflation bogeyman.

Presumably the central banks will be damned if they do and damned if they don't, but the weight of probability has fallen decisively (in recent days) that both will cut by 0.25%. In the current rather fevered situation, it must be correct to take a more pragmatic approach than the rather blinkered 'inflation watch' stance.

Indices are a tad weaker after the US indulged in one of its late night sell-offs with the S&P giving up on the 1400 level for now. The FTSE is called to come in 30 lower at around 6230 but the bulls still seem to hold the upper hand and shorts are vulnerable to spikes higher.

Gold continues to struggle to regain some momentum and the major support between 845 and 850 may exert a fierce pull for dealers looking for weak long positions to attack. This morning, the price is at $866.0-$866.5 having failed to break back above the 882 resistance earlier this week.

The unexpected loss reported by Carlsberg this morning might rattle a few nerves however. The reasons given were higher marketing, energy and distribution costs. Marketing is obviously a huge slice of 'probably the best lager in the world's' expenditure but the hikes in energy and fuel-related distribution will be worrying analysts across a swathe of sectors. If this hit to margins is replicated across the board, the reporting season could be a bit grimmer than expected.

Speaking of which, it never rains but it pours for old UBS. Hard on the heels of the debacle over sub-prime asset write-downs, comes the news that their much-vaunted wealth management unit in the US is being investigated for the period 2000-2007 over advice given to US citizens. In a sort of double whammy, they are also on the receiving end of a good going over by the Germans over alleged advice, telling clients to actually hide funds from the authorities.

This type of bad news can be terminal as high-net-worth clients will naturally shy away from anyone likely to be attracting the specific interest of the tax authorities. The fact that withdrawals for the first quarter were greater than deposits is not exactly encouraging when you realise that this state of affairs happened before the aforementioned tax investigations. What will be their deposit/withdrawal rate over the next few months?

Commodity-wise, Gold and precious metals will attempt to hang on to the current levels. As I have commented many times over the past couple of months, gold is not the 'new paradigm' - it is just another investment tool. If it gets too cheap it will rally and if it gets too expensive it will fall.

All the talk of $1500 and $2000 may well be correct in the long term but at the moment the trend is getting bearish. Each fall is hitting new lows and each rally failing to attain the previous rally's highs. This is classic bear market material and there is a good chance of a move back up to the $902 resistance level. However, if the major 845 to 850 support is attacked then unfortunately for all those gold bulls, the probability then swings towards a return to the high 600's which dominated the price action of early 2007.

Oh for those bad, mad days when oil was trading in New York at almost $120 a barrel, and the head of Opec was talking of $200 a barrel. Those big oil prices were in evidence almost an entire, er, week ago.

Of course, oil went up not just because of industrial action in Nigeria. The real price-driver has been the weak dollar, encouraging investment into oil and other commodities.

Conversely, the strengthening of the dollar this week has prompted investors to shift out of the commodity, contributing to the downward trend of prices. But will it last? "It's all about the dollar," says James Cordier, of Liberty Trading Group to the BBC. "[And] I don't think the dollar is going to stay strong."

Can the dollar rally? And is it safer to have your money in dollars or in oil?

This contraction of price action is causing something of a headache for market watchers. Is it a signal of the beginning of the end for volatile periods of the last eight months? Or is it merely a pause before a big break-out in either direction?

The answer to this question is likely to make somebody very rich but at the moment we are no closer to knowing what it is. Unfortunately. The volatility index (which measures future expectations of market risk) is near its lows of 2008 at around 20%, but even though the markets appear to be moribund this measure of future action seems to be struggling to go lower than the aforementioned 20% mark. In January and March the measure hit over 35% as we watched indices lurch every which way, but since 2004 the 20% level had been something of a peak which is presumably why it is now acting as a support.

In this scenario it is easy to become complacent and assume that any move will create a counter move later in the session or the next day, and this in turn tempts traders into 'opposing' any market moves i.e. if the Index rallies, 'sell it', whereas if it falls, 'buy it'. Unfortunately this is probably the single simplest way of turning a lot of money into a little as the adherent to this philosophy will always get caught out when the market does finally decide to break one way or the other. But I have to admit, at the moment our clients who are following this simple strategy are doing very well indeed. Sellers of everything above 6100 and buyers below 6050 have seen six separate opportunities in the last five days.

The FTSE is called some 15 points lower this morning at around 6075, but with much of Europe taking the 1st of May off, and probably then making a long weekend of it before the UK takes Monday off, the chances are that volumes are going to be on the light side. Without one or other of the major centres (UK, US or Europe) in-play, the whole market tends to drift and after the last five days' performance it is difficult to imagine it being any different this time.

In the currency markets, the Pound regained its trading range with some ease yesterday afternoon, and we are back in the 1.9700 to 2.000 region once again. 1.9906-1.9909 is the current level and I can see our clients who bought the move below 1.9700 in large numbers yesterday, taking profits very soon on the not-unreasonable basis of "let somebody else take us above $2 if they can - I don't want to risk it with my money"!

Today should be a very quiet trading session as the markets await this evening's FOMC rate decision. Commentators appear to be in two minds but the consensus is currently falling towards a quarter point cut to 2% (still some 3% below the UK).

I'm not sure that the current woes in the US economy can be easily solved with further rate cuts. If you cannot afford a loan at 2.25%, 2 is unlikely to be any better and there is always the other side of the equation of course - that of the lender.

Before the FOMC we actually have a couple of other quite important pieces of data from across the pond in the shape of the advance GDP number, the ADP employment report and the Chicago NAPM survey. So it will not be for lack of data that the markets trade into today's session.

As mentioned, the FTSE will be opening almost unchanged, about ten lower at 6080 and the Dax ten higher at 6895. However, the UK index might struggle to hold these levels in early trade as the Oil and Metals markets fell sharply from the previous day's closes. Mining stocks may be weaker on the off with BHP and Rio trading some 3% down in Australian markets.

Oil is now all the way down at 'just' $113 in the June Brent contract. This is no less than $4 from the highs, but I do not get the impression that we are witnessing a concerted sell-off just yet. A pause for breath is the more likely narrative. If the weakness continues over a couple of days then we may find that the sentiment turns sharply, but until this happens, I am afraid that peak-price oil looks here to stay.

Gold is attempting to bounce off the $871 support that it hit back on the 1st April, but as I have mentioned many times before, in the absence of seriously bad news the argument for holding the yellow metal start to deteriorate, and with the Dollar trying to recover some ground at the moment, Au is suffering.

Even so in recent times, the rejection of highs has tended to be rather more violent than yesterdays price action and the closing level was actually virtually unchanged on Friday's close. There are two differing views to take from this - either it is a confirmation of the resistance levels at around 6100, or the pressure on selling was not enough to cause the bulls to throw in the towel.

Corporate results yesterday and this morning have rather flown in the face of perceived wisdom, with retailers such as Game Group's profits doubling (obviously the last thing to be cut out of consumer spending is Johnny's new computer game) and BP (maybe not so startlingly) reporting a 63% increase in net revenue. BP's numbers were struck when oil was at an average of well below $100. Q2 will see (almost certainly) an average substantially higher than this.

Bank stocks look to be suffering once again as the pressure on spending gets ever more intense, and as HBOS finally calls in the rights-issue boys. £4 billion is (like the RBS number) at the absolute top end of expectations so the dilution of equity looks a tad heavy and is likely to weigh on valuations for some time.

The markets today look to be going over the same ground as yesterday with Gold and Oil reversing some of the recent gains.

There is a slight dislocation between the FTSE 100 and the US indices, with the former up 30 points and the latter all down a similar amount, but to be honest there seems to be little in the way of momentum, and with every attempt at a break out either up or down seemingly being defeated, the prospect is for a quieter start to the summer than in previous years.

The financial sector seems to be taking the (expected) HBOS rights issue in its stride as with only Barclays to come (and even that not certain), this is likely to be amongst the last of the big calls. Punters are now trying to look through the current problems to the uplands beyond.

Markets this morning are looking to open higher as mentioned but the important point will be whether we are able to maintain our 6100 plus level in the FTSE 100 or whether we will just get sold back through it. There is almost certain to be an attempt to push lower in early action.

With the Grangemouth problem reaching its zenith, the price of Brent has spiked to $117.50 - caution however - this may be an example of 'buy the rumour, sell the fact.' Many factors are driving the price of oil higher but some of them are temporary, and there is a good chance that there will be a spike move higher to take out weak shorts in the near future but that this may well indicate the highs.

The overall European index worsened considerably with German, Spanish and Belgian numbers reversing recent growth expectations, and the European Central Bank is now coming under increasing pressure to react to the economic situation rather than the inflationary one.

The strength of the main indices across the globe would hence seem to fly in the face of 'common sense', but with many companies now giving on a historical basis, wonderful returns, and with interest rates probably on a medium to long-term downward spiral, the search for returns leads investors unerringly towards the shell-shocked parts of the equity markets.

Clients are hence buying heavily into the financial sector as the Royal Bank of Scotland rights issue sinks into trading psyche. Four days of selling since the announcement has left the stock looking very attractive, if you believe that the bank will get the sort of historical returns out of the cash injection that it has in the past. The problem is, of course, whether the continued worsening of credit worthiness of the mortgage book starts to filter into the corporate sector.

The trading range of the FTSE almost exactly matched the previous day's efforts, with the ultimate result also almost identical. The markets continue to wrestle with the 5970 to 6100 range.

Yesterday's action was an absolute boon to our clients who have not have been heavy sellers at anything above 6050. The fall down to 5950 brought out heavy profit-taking and then a strong reversal which many punters bought into. The net result was a lovely profit on the way down, and an even better one on the way up. We are still stuck just under the 6100 level this morning but the bulls seem to have the best of it at the moment. Every time we get up to this level and it seems as though the break-out is imminent, traders decide to run out of steam.

Gold and Oil have responded to the Dollar strength and retreated over the past few days (only a little in the case of oil but significantly in gold). There are considerable long positions still in many commodity markets and if the perception takes hold that the best has been seen, then we could well see some really alarming price action in the coming months.

In the absence of any really bad news this morning and a good positive move higher in America yesterday and Asia overnight, the FTSE is playing catch-up and we're calling to open around 5960. Short and medium-term bulls are asking themselves whether a low has been marked for the time being and it would certainly seem to be the case as the attempt to test lows at the end of last week and on Monday looks to have been rather half-hearted. However, clients are more bearish of the UK at the moment and have been selling into this strength, perhaps thinking that 6000 will once again prove a big hurdle.

It is not often that I look at the client positions on the global indices to see that there is a really mixed bag with bulls of US tech stocks, a flat US blue chip book and FTSE bears. Too often it's the case that clients have a one-way view across all the indices, but it just goes to show that there is a real mixed feeling about things at the moment.

There is little in the way of economic data today, but interestingly last night's release of the FOMC minutes gave a very interesting reading. A few members of the committee called for a smaller cut than the 0.75% the Fed made on 18th March showing that as with our clients, even the Fed is finding it difficult to find common ground in an attempt to steer their economy out of trouble. With oil prices hitting yet another record high overnight, the majority of the Fed are brushing the inflation problem under the carpet for the time being. It's now easy to see why the UK's central bank is so reluctant to cut rates when inflation shows no signs of abating.

Dollar weakness continues to be the theme in currency markets with the Euro around 1.5840 and looking like it wants to test record highs of 1.5900. Even sterling is a little stronger against the Dollar (bouncing off the support level I mentioned yesterday), and it's fighting hard against the Euro too. EU countries must be praying for the trend to change as their currency has got so expensive that soon they'll really be starting to feel the pinch. But when you look at the charts, it's difficult to see where the current bull run will end.

In the UK, with just about every indicator you care to mention moving into the red warning zone, the equity markets look to be defying gravity.

Tesco's bottom line numbers announced this morning were better than expected and this will bolster investor hopes for the new business in the States. 'Fresh and Easy' has been curtailed for the time being but Tesco are big enough to plan long-term for such an enterprise and the temporary slow-down in the US makes it prudent to put expansion on hold for the time being.

The FTSE is opening around 50 points up on...well, nothing very much - just the normal mining and oil rallies! The Far East managed to stop yesterday's rot, but the Hang Seng and Nikkei did not exactly roar away this morning with both indices recording small gains.

On the currency front the Pound is suffering badly with the crosses falling against all the majors (even the Dollar). We are now at yet another all time low vs the Euro (I should know as I have just returned from Spain and the prices are eye-watering). The chart is frankly appalling and whilst I am not exactly a sterling bull, this level of devaluation appears well overdone.

For many nations within the Euro bloc the high levels of their currency will be spelling DOOM in very big letters. The ECB will almost certainly come under very strong pressure to cut rates and now that Berlusconi has been re-elected the doves may gain a very powerful (if at time incoherent) ally.

A survey of its members by The Royal Institute of Chartered Surveyors found that 78.5% of all men in grey suits say property values have dropped. This is apparently the most negative reading since 1978.

Analysts at Morgan Stanley have kindly added to the gloom by suggesting that unless market conditions change, UK house prices are expected to lose 15% of their value over the next two years, rising to about 20% when inflation is taken into account.

Hence the Bank of England has lowered interest rates. It may do so again. Although most of the money is on rates remaining at 5.00% in May, the chance of them going down certainly exceeds that of them rising.

Tradefair currently has the BoE reducing interest rates in May to 4.75% at 47.5, and to stick on 5.00% at 84.9 per cent. Get involved!

The good news is that all this was the centre of discussions at the meeting of the G7 finance ministers this weekend. The bad news is that its difficult to see what was achieved from all the talk apart from a few calls for further regulation.

The FTSE call this morning has been spot on, coming in to open 50 points lower around the 5845 mark. The market wasn't helped by a weak close from US markets on Friday evening and a move lower by Asian markets overnight. Japan's Nikkei fell by as much as 3% and in Shanghai stocks suffered a 5.5% move into the red.

The Dollar briefly benefited from the comments made by G7 finance ministers who voiced their concern over excessive currency fluctuations, but already the Euro has recovered from its overnight lows of 1.5670 back to the 1.5770 mark.

Gold as a result is also lower this morning around $921, having been as low as $914 in the Asian session. The Dollar's little recovery against all the other majors has led to a little pressure on metal prices, but the feeling in the market is that the trend is not over.

But why was it done? "It is vitally important to ensure that problems in the financial sector and in the housing market do not damage wealth-creating businesses," says David Kern, economic adviser to the British Chambers of Commerce. So he should know. Kern goes on to state, "Undue delay in acting threatens to reduce the effectiveness of interest rate cuts that the MPC itself has anticipated already."

Dithering costs money. A quarter-point reduction may not be enough. The rate, if it goes anywhere in the next few months, will go down and not up. The Daily Express (which at least has been doing its bit to spread its proprietor's wealth around of late by libelling people all over the show) is predicting a loan rate of 3.25% next year. But if these journalists knew anything about the economy, they wouldn't spend their days writing about the weather in the Express, but rather would be able to choose the weather they want, by earning truckloads in the city, and jetting off skiing or sunning every other week. Rant over.

Meanwhile, the interest rate binary market is trading at 90% on May's rate going to 4.75 percent, and at 80% to remain at 5.00%. Much could depend on how the rate reduction affects inflation. The Bank says inflation could remain above the Government's target of 2%. The BBC reports that, "inflation should fall back, even if the price of oil and other commodities remain at their current high levels."

Oil's well that ends well. That's a pun. And the oil traders are gurgling with laughter. Oil has surged to over $112 a barrel.

Of course some 70% of FTSE100 stock income is from foreign earnings, but even here a large proportion is in Dollars, which itself has only been marginally stronger than Sterling. The preponderance of mining, tobacco and oil companies in the index is helping to offset the falls in Banking and Retailers - it must be pointed out that if the remainder of the index had matched the falls in these two sectors we would be 2000 points lower!

In the midst of all this turmoil the IMF states that the UK is particularly exposed to the current crisis. The exact opposite to Captain Darling who stated (without much evidence) that the UK was better prepared to ride out any economic downturn than the other G7 nations. Who do we believe?

Oddly enough, for all of the insults heaped on the Treasury forecasts over the past years, they have been the most consistently correct over recent years. The IMF on the other hand, the most consistently incorrect! This time however the boot is almost certainly on the other foot - a whole host of factors are combining to build a massive brick wall on the highway of continued growth.

Today we see the FTSE holding on to the gains of the past week or so, as the opening levels have us up close to the 6000 level. We have now spent four sessions in a tight trading range, and looking back over the past months this kind of contraction has always been the precursor to a big move. Our punters are positioning themselves for this move to be to the downside, but the probability may be for a spike higher as a continuation of the recent trend.

My hope that the big commodity bull run might be easing has been dealt a cruel blow by the rise and rise of the oil price. Whilst precious metals are still well off their highs, energy and base metals are pushing the envelope again. And whilst we may be complaining about the cost in the UK, pity the weaker nations who do not have the fat to absorb the latest price hikes.