This week has been a bit of a rollercoaster for equity markets, down on Monday, a big rise on Tuesday, followed by another weak session yesterday, with markets in both Europe and the US getting whipped around by a combination of some weak earnings, and yet more bombast from President Trump this time about the possibility of a government shutdown, raising concerns about further US political dysfunction as we head into September.

Yesterday’s speech by ECB President Mario Draghi was also particularly light on detail when it came to what to expect from this week’s annual central bank symposium at Jackson Hole in the Grand Teton Mountains in Wyoming. What is clear though is that the markets believe that the ECB is on course to begin tapering their stimulus program, and the only unknown is the timing of such measures.

Whether Draghi likes it or not the ECB will have to cut back on stimulus simply because the outstanding bonds available to buy is diminishing rapidly, and the continued expansion in economic activity and factory growth points to a fairly resilient recovery in Europe.

The rise in the euro hasn’t been helped by the weakness of the US dollar and the continued outbursts of President Trump, this time threatening to shut down the government in September unless he gets funding for his Mexican wall, offsetting speculation that we might get some sort of detail on possible tax reform. His comment about probably terminating Nafta didn’t help either.

When the first iteration of UK Q2 GDP was first released a few weeks ago it was surprising in how weak the numbers for the manufacturing sector were given the resilience of various private sector surveys which pointed to and continue to point to a strong expansion in this sector.

An improvement on Q1 was the least of expectations and that is what we got, but only from 0.2% to 0.3%, which was a little disappointing given the significant improvements seen in a lot of the survey data, and the continued decline in unemployment.

Today’s second estimate will have the benefit of slightly more data to work with, however expectations are for an unchanged reading of 0.3%, with a moderate decline in business investment to 0.2% from 0.6%.

Services once again are expected to make up the lion’s share of the expansion with 0.5%, as the weak pound prompts resilience from overseas visitors in the travel and leisure sector.

The main puzzle remains around the divergence from private survey data, and the ONS numbers which have been uniformly negative.

For all of this year these independent surveys have been much more optimistic, from the likes of the CBI and the Markit, and quite frankly better when it comes to reporting the improvement in order books in terms of surging export markets, as well as rising employment levels in the sector.

The ONS numbers on the other hand have been uniformly negative with only one positive month so far this year, in April which rather invites the question as whether the ONS numbers are even fit for purpose, which then goes on to raise the question as to whether the GDP numbers are fit for purpose either.

The UK consumer has also been in the spotlight recently as concerns over rising prices and squeezed wage packets crimp spending. This squeeze has diminished in recent months and this does appear to be reflected in recent retail sales data, and today’s CBI realised sales numbers for August could well determine whether we’ve seen a bit of a slowdown after a June and July bounce.

Expectations are for a reading of 15, down from 22 in July.

EURUSD – continues to hold below the 1.1850 area, and while it does so we remain vulnerable to a pullback towards the 1.1680 area. This remains the key support, while below that we also have the 1.1620 level.

GBPUSD – has continued to decline dropping below the 1.2800 area bringing with it the risk of a move towards the 200 day MA at 1.2600. We need to move above the 1.2940 area to retarget the 1.3040 level.

EURGBP – no sign of a pullback thus far as we continue to edge higher as we look to head towards the November 2016 peaks at 0.9300. Support remains down near the 0.9040 area and below that at the 0.8980 area.

USDJPY – current support remains around the 108.50 level and above the April lows at 108.13 the next key support, however the current rebound looks on the weak side, and needs to overcome the 109.80 level initially. We need to push above the 111.30 area to stabilise.

CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.