It was a rather mixed day on the markets yesterday, with US markets looking quite resilient, and the S&P500 setting a new record high, while European markets were rather more mixed. The German DAX and the CAC40 both declined quite sharply after the latest flash PMI’s for April painted a weaker than expected economic picture for both the German and French economies. The FTSE100, on the other hand, finished the day higher, helped by a rebound in basic resource stocks, which rallied on hopes of further Chinese stimulus measures after an unexpectedly weak manufacturing PMI number. Asia markets have slipped lower overnight after a positive week as profit taking kicks in ahead of the weekend. As regards yesterday’s decline in Europe the rather tepid French and German economic readings were especially disappointing given recent optimism about the rebound in economic activity in the euro area amidst comments earlier this week from ECB President Mario Draghi, that the recent actions by the ECB had been instrumental in underpinning the recent improvement in the latest economic data in Europe, and would continue to be effective, as the recently started QE program continues to filter through. For this confidence to be validated you would have expected to see a continued improvement in the numbers, and these numbers are a worrying setback if they prove to be sustained. Already this week we’ve seen a decline in German ZEW economic expectations, and while this particular number does have a tendency to be a little unreliable, the IFO survey generally doesn’t. German businesses tend to be a much more reliable guide with respect to the German economy, and if today’s latest IFO survey of the business climate also paints a weaker picture, that would be a little more troubling. Expectations are for an improvement to 108.4 from 107.9 in April. Over in Riga, at today’s meeting of EU finance ministers meeting, expectations of a deal between EU creditors and Greece are virtually nil, with both sides playing down the prospect of any agreement before the end of the month. So much for that six day deadline imposed by the EWG last week, which seems to have gone the way of every other deadline before it, evaporating into thin air. Optimism of some form of deal does appear to be slowly trickling back, with a higher open expected in Europe this morning, but it still remains fragile given that the Greek government has to pay salaries and pensions by the end of the month, and has only managed to do so by sequestering funds by decree from local governments, pension funds and other publicly owned bodies, in a move that has caused a great deal of controversy within the country, including amongst some of its own supporters. While the prospects of possible Greek default haven’t receded, it would appear that the timing has been delayed once again as both sides try and come to a deal that they can somehow sell as a solution that will satisfy everybody, as Greek finance minister Varoufakis once again reiterated the Greek governments red lines with respect to wages and pensions, and insisted that lenders must change their failed approach of the last five years. In the US the recent spate of slightly weaker than expected economic data continued yesterday as weekly jobless claims, new home sales and manufacturing PMI all missed expectations. As such today’s March durable goods orders become that much more important in the context of the US consumer, and the confidence to go out and spend money on white goods, TV’s and computers, and other big ticket items. For the last few months retail sales have been lacklustre and consumer spending weak, while durable goods have declined for five months in a row. If the March numbers also show a decline, which they aren’t expected to, it would be the worst run of declines since the end of 2008. Expectations are for a rise of 0.3%, and improvement of -0.6% in February. Whatever happens, next weeks Fed meeting is likely to take on much greater significance in the event of another weak number in the context of how the FOMC might spin the timing and expectations of when a possible rate rise may occur, with prospects of a June rate hike pretty much gone. EURUSD – yesterday’s euro decline bounced off the support line from the 1.0520 lows keeping the recent uptrend intact. This keeps the prospect of a move back to 1.1000 very much on the cards. Only a break below trend line support at 1.0680 from last week’s low at 1.0520 suggests a move back lower. GBPUSD – yesterday’s dip found support at 1.4960, keeping alive the prospect of further gains towards 1.5200 initially, and then on to 1.5500. This resilience reinforces last week’s bullish weekly reversal candle. Pullbacks should find support at the lows this week at the 1.4850 level. A fall below 1.4850 retargets 1.4780. EURGBP – yesterday’s rebound from 0.7117 suggests we may have seen a short term base. To mitigate the downside pressure we would need to see move back through the 0.7235 area. USDJPY – despite a quick peak above 120.00 yesterday we’ve slid back again. We need to retake the 120 level to retarget the 120.70 area and the highs at 122.00. While below 120.00 the bias remains for a return towards the March lows at 118.30. A move below 118.30 retargets the 116.50 level. 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.