The first unknown is the continuing political crisis between Russia and NATO countries. The focus has now shifted from Georgia to the proposed missile defence battery to be located in Poland. The longer this goes on without constructive dialogue from either party, the more nervous investors become. As testament to investor's growing unease, oil prices finally started to move higher on Thursday and Friday, potentially a significant development considering the recent ambivalence to the current crisis seen in crude prices.

Secondly, the specifics of the expected US government bailout of the GSEs; Fannie Mae and Freddie Mac are still unknown. With billions, potentially trillions at stake for the US government and US tax payers, equity and bond traders alike are wary of taking on large positions. The bail out itself isn't what scares investors per se, as these Government Sponsored Enterprises (GSE's) have always been implicitly backed by the US government. However, the fact that they have to be bailed out doesn't bode well for the housing or financial sector and more specifically the mortgage related investments that sparked the credit crunch in the first place. First, it was 'sub prime' mortgages that posted record levels of arrears or foreclosure type activity. Now the strain is increasingly being felt on so called Alt A and 'prime' mortgages as the effects of the credit crunch widens to hit supposedly safe borrowers. A glimmer of light was shone on the UK mortgage market with gross mortgage lending rising 5% on the previous month and the release of the minutes from the last MPC meeting hinting at the possibility of a rate cut this year. It remains to be seen whether this is a blip in the housing collapse or the start of a genuine turn around.

Next week the economic calendar starts with US existing home sales numbers on Monday. There is no UK data or stock market activity to start the week as the UK markets will be closed for the bank holiday Monday. Tuesday brings the German IFO business climate index in the morning then US Consumer confidence figures and new home sales data in the afternoon. Later that day, we have the release of the FOMC meeting minutes and traders will be keen to examine the voting patterns as an indicator of future policy. The Nationwide House Price Index is tentatively planned for Wednesday morning with US Core durable goods following in the afternoon. US GDP figures On Thursday is the last heavy economic announcement of note for the week.

Last week, scorching hot US PPI numbers came in at 1.2% for July, twice analyst's estimates. The danger with price inflation isn't the rise in primary costs necessarily, but the volatility of the secondary effects. There are many price hikes in train with increased wage demands and food costs potentially sparking a secondary inflationary spiral that could be more damaging in the long run. Producer inflation is unfortunately not isolated to the US, in fact the UK has experienced greater producer price inflation than the US, Germany and even China since 2003 (According to the latest July YoY figures).

These inflationary pressures and the two unknowns previously discussed could see the current choppy action continue. A Barrier Range trade returns a profit if neither of two levels are hit within the specified time. A Barrier Range trade on the Dow Jones Industrial Average (Wall Street) to not touch 10627 or 12100 at any time during the next 16 days could return 21%.