David Cameron made a big call last Friday to veto the new EU treaty, which was much to the dismay of the Lib Dems. 

They had even considered quitting the coalition until they saw two major public opinion polls in the form of The Times and Daily Mail, that sided with the Tories’ decision on the veto.  Lib Dem Clegg, believes that Britain will become isolated and the move won’t actually do anything for The City or jobs up and down the country.  Only time will tell whether Cameron has made the right choice and if it pays off.

Whilst the UK attempts to sort out their problems, the world is still waiting to see what will become of the eurozone’s problems.  IMF Chief Economist Blanchard agreed there had been some progress, but we haven’t actually reached a full solution, and every time we get a statement out of Europe we see volatility in the markets.  The summit last week attempted to agree on boosting the eurozone’s loans to €200bn, which would accelerate the European Stability Mechanism in order to increase its lending capacity. 

After last week’s volatile intraday market swings, we have seen the FTSE start the week on a downer, floating around the 5500 mark.  We could see further volatility as we have the release of some data this week, in the form of UK RPI and CPI inflation data.  There is also German ZEW Economic Sentiment which could bear an effect on FX traders watching the euro.  We are currently seeing a bit of a bearish stance on the FTSE with 5555 as a key resistance level, and so we could expect some short term consolidation.

The dollar is up fashionably in line with the bearish view on equities, as traders appear to be more risk adverse this morning.  FX traders have looked to the safer currencies as expectations for German data showing economic sentiment will be that investor confidence is at a 3 year low.  The euro is trading lower against the dollar at 1.3310 which may be pricing in the speculation for tomorrow’s data release.  The pair see support at 1.3285 and resistance at 1.3390. 

Despite the bearish trader sentiment, gold isn’t being seen as the safe haven it one was, but more of a traditional commodity.  It is down this morning at 1688, in line with other metals including copper, aluminium, zinc and nickel.  Meanwhile, silver is following a bit of trend as every time it drops to the 31 level, it has a quick-fire recovery.  This has been the case since mid November, and despite being dragged down by gold, this current trend could continue. 

Oil has had a pullback which continues last week’s decline, on the back of concern for the eurozone debt situation, which could in turn prompt Iran to call for production cuts at OPEC’s meeting this week.  Bearish speculation has ruled this morning, and we are seeing Brent trade lower at 107 and Crude lower at 98.  This sentiment may continue until the OPEC meeting on the 14th where we could get more on an indication as to plans for production.