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The FTSE stumbled out of the gate this morning and has been unable to recover throughout the day. The main catalyst in the UK market was UK retail sales coming in at below estimates. This is a further blow to the UK economy which is still reeling from implications of the shocking Vodafone numbers on Tuesday. At the centre of the storm, the US economy is also showing sides of further weakness, not recovery as many hoped at the beginning of this week. US initial jobless claims came in worse than expected and home sales were worse even than the dire projections from most economists. It is little wonder they are so bad with the average 30 year fixed mortgage in the US now at its highest level since 2002 despite the dramatic rate cuts from the fed earlier this year.

Oil is hovering around the $125 mark, but that will be little comfort to Ford who registered a $8.7bn loss as consumers shun their gas guzzling, SUV heavy catalogue of vehicles. The buying from last week is looking increasingly like a suckers rally as traders realise that the worst may not be behind us and may in fact may appear very soon in the future.

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The FTSE is currently indicating a slightly lower opening, as traders are waiting for the release of the UK retail sales numbers. Recently the health of the consumers has come into question, with falling home prices and higher unemployment figures consumers are stuck between a rock and a hard place. We believe that the number will come in slightly weaker then expected, and result in weakness among the retail sector of the FTSE and a selloff in the GBP/USD.

Commodities suffered again last night, as the US dollar flexed its muscle yet again. Gold which started the week near the 970 level is now trading almost 50 dollars lower, and oil is below the 125 mark. This is all short lived, and we should see oil prices increase in the coming days. Expect oil prices near 130 before the end of the week. Gold, which is used to hedge the US dollar, might not see a return to recent highs for a while, but yesterdays sell off was way overdone, and a bounce back probably above 930 is in the cards

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