A rout in Chinese equity markets on Tuesday saw European and US markets undergo a rather weak session yesterday as commodity prices once again came under concerted pressure with copper prices hitting fresh six year lows. The only bright spot was a rebound in US oil prices from its own multi year lows, but this was probably as a result of some short covering, ahead of some key stockpile data later this week. The biggest concern now is that further declines on the part of China’s markets could prompt a global negative feedback loop and in the process pull European and US markets lower as well. Today’s Asia session has been similarly negative with selling pressure in Shanghai rippling out through the rest of the Asian markets, and this could well weigh on the open here in Europe this morning. The main focus today in Europe will be on a number of parliamentary votes in Europe including the German Bundestag on the latest Greek bailout. Optimism around Greece seems to be catching on after Fitch upgraded its credit rating from CCC, to CC, saying that the risk of default had been reduced somewhat, though risks remain high. While the vote is expected to pass, attention will be focussed on how many German MP’s rebel against the motion, with some estimates putting the numbers as high as 100, as uncertainty over the future involvement of the IMF complicates Angela Merkel’s efforts to convince the German population, as well as a large number of her MP’s that Greece is worth persevering with, and that this latest bailout won’t go the way of the other two. There still remains the small matter of the IMF’s role given its insistence on debt relief, of the kind where the principal is written down, which differs significantly from the kind Germany wants, which is maturity extensions and grace periods. The Dutch parliament is also expected to vote on the latest measure, and here the vote could well also be problematic for Prime Minister Mark Rutte, who went back on a pledge not to put forward any more cash for Greece. A bigger than expected jump in UK core CPI for July saw the pound push higher yesterday, as markets slightly readjusted their rate move horizon for the Bank of England, but the markets main focus continues to revolve around what the Federal Reserve might do next month as investors continue to react and adjust to each positive or negative US data point, with the hope that we get could further insights later today with the release of the July CPI numbers and the latest FOMC minutes. If the latest US CPI numbers for July, also surprise by coming out a little stronger than expected we could well see a similar jump in the US dollar, though given some of the recent weakness in commodity prices in the last month, an upside surprise would be unexpected. Expectations are for an annualised rise of 0.2% in July, with core prices expected to remain at 1.8%, but most of the attention is likely to be on the release of the minutes of the July 28th and 29th FOMC rate meeting. There is the probability that the minutes are likely to be a little stale given recent events in China, and the volatility seen there, but nonetheless they should still give us an insight into the musings of those on the committee about the effects of overseas events might have on their deliberations. Furthermore they should be instructive in the context of whether any other members are also leaning in the direction of Atlanta Fed President Dennis Lockhart when he stated earlier this month that the bar to not acting on rates was quite a high one. For now he is one member leaning in that particular direction, but if others on the committee were to also lean that way we could get a sharp reaction. Possible candidates might well be the Richmond Fed’s Jeffery Lacker or John Williams of the San Francisco Fed. EURUSD – the euro continues to look weak, declining for the third day in a row. We could well see further declines on a move below 1.1020 towards the 1.0950 area, and possibly 1.0860. We need to get back through the 50 day MA at the 1.1090 area to stabilise and suggest a return towards 1.12 GBPUSD – yesterday’s break through the 1.5700 level lacked the follow through needed to push higher, and the pound subsequently slipped back. The bias continues to remain for a move higher towards the 1.5820 level. Interim support comes in at 1.5600 and 1.5530. EURGBP – yesterday’s decline saw the euro push below the 0.7040 level to 0.7025 before rebounding. The bias remains for further weakness while below the 0.7120 pivot. As such we could well see a revisit of the lows seen earlier this month at 0.6950. USDJPY – the bias remains for more range trading with resistance above the 125.00 level, which while we remain below means we remain vulnerable to a drift lower, with support at the 123.75 area, and then 123.00. Only above 125.90 argues for a move towards 127.20. 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.