There were no surprises from last night’s FOMC rate decision, with the Fed stating that the economy had "paused" however we did get a surprise from US Q4 GDP and that does appear to have knocked some of the stuffing out of the recent market rally. Investors however once again were keen to accentuate the positives from what was an exceptionally poor number. While it was notable that the biggest drag came from a reduction in defence spending, some investors took comfort from the fact that personal consumption held up quite well, pretty much in line with the Q3 numbers. As such the same old clichés about GDP being a lagging indicator will be trotted out with one-off effects being blamed along with transitory factors, and to a certain extent that’s true, but even allowing for that, concerns must remain given some of the more recent economic data seen this week. For example consumer confidence in January has already given a good indication that the US consumer is nowhere near as optimistic as they were two months ago, which is likely to act as some form of brake on personal consumption in Q1, while defence spending is likely to continue to remain subdued until the March sequester is dealt with. Though yesterday's ADP numbers were better than expected they still paint a picture of an economy adding jobs at a slowing rate, and as such places much greater importance on Friday's key employment report. The latest weekly jobless claims are expected to show an increase from 330k to 365k, while the Chicago purchasing managers index is expected to stay around stagnation level of 50.5 In Europe the most recent Greek and Spanish short selling bans expire today while the latest German retail sales data for December and January unemployment data are due for release. Given that we saw the German economy contract in Q4 it really wasn’t too much of a surprise to see a fall in retail sales, however the extent of the fall off was, with a fall of 4.7% year on year, well beyond expectations of a 1.5% drop. On a month on month basis sales fell 1.7%, with expectations of a flat month. Of greater interest is the latest German unemployment numbers for January which are expected to remain at 6.9%, with an increase of 8k, further evidence that the German economy continues to weather the worst of the problems in Europe. EURUSD – yesterday’s break above the 200 week MA at 1.3530 if sustained brings with it the potential for the test towards 1.3835, the 61.8% retracement level of the 1.4940/1.2045 down move. Pullbacks should find support at 1.3400, while below that we have the 1.3250 level the January lows. The long term support line from the 1.2045 lows now comes in at 1.3100 which remains the key level on the downside. . GBPUSD – we need to see a break through 1.5830 to target the 200 day MA at 1 5910 which is now the larger resistance. The key supports remain at 1.5680 the 61.8% retracement of the 1.5270/1.6380 up move. There is also long term trend line support at 1.5630 from the 2009 lows at 1.3500, a break of which opens up the 2 year range lows at 1.5270. EURGBP – having broken above the 200 week MA the trend line resistance at 0.8600 from the 0.9805 highs has capped the euro gains so far. A break of 0.8610 has the potential to target the 0.8700 area. The 0.8425 level should now act as support on any pullbacks. Long term trend line support at 0.8115 comes in from the 0.7755 lows. USDJPY – the US dollar made a marginal new high at 91.40 before slipping back again. The 94.00 level remains the key long term objective but the risk remains for a sharp pullback, with the 90.30 level initial support. Key support remains all the way back at the 87.50 level.