It’s not been a good week for European equity markets with the rebound in the euro knocking the German DAX down quite heavily, posting its first monthly loss this year. The declines this month and this week also raise the prospect of more losses to come, particularly if the euro continues to rise in the coming weeks, which seems quite likely, given that it is becoming increasingly apparent that any prospect of a US rate hike has receded by at least three months. The fact is the sell euro/buy European equities trade had become a crowded one and what we’ve seen at the back end of April is a recognition that it might be time to cash in some of those chips. With most of Europe closed for the May Day holiday the main focus today will be on how much of a good start the second quarter of this year has got off to in the UK and US after this week’s rather disappointing Q1 GDP numbers from both countries, with the FTSE100 expected to open slightly lower after Chinese manufacturing for April came in pretty much in line with expectations, though services came in slightly softer than expected at 53.4, down from 53.7. In Greece, monthly payments for pensions appear to have gone through, albeit with some technical hitches, though Greek officials have denied this, after government officials managed to scrape together enough money to meet the governments obligations. Attention now shifts to the latest IMF payment of €200m which is due to be sent to the IMF in the next few days as negotiations continue about the latest reform measures with EU officials. The biggest problem for Prime Minister Tsipras in the event of any deal, and this still remains some way off, will be selling it to his party, with talks set to continue over the weekend holiday period. Here in the UK we have the latest April manufacturing PMI, as well as the latest lending and money supply data for March. Despite the rather disappointing Q1 GDP number earlier this week the manufacturing sector has rebounded in recent months with a strong performance in March and this s expected to continue in April with a rise from 54.4 to 54.6 expected. The latest lending data is also expected to see an improvement, with net consumer credit expected to rise to £0.8bn from £0.7bn, and mortgage approvals expected to rise from 61.8k to 62.4k, and the best number since September last year. A continued improvement here would certainly bode particularly well for the start of Q2, especially with all the uncertainty surrounding next week’s election. The US economy will also be in focus today in light of this week’s sharp fall in Q1 GDP, and fairly neutral FOMC statement, particularly in light of yesterday’s sharp falls on Wall Street. The sharp improvement in weekly jobless claims to a fifteen year low, tied in with the FOMC pulling up the shutters on further guidance has put US markets on edge. US investors are now flying blind with respect to a potential rate rise at a time when the US economy continues to give mixed signals about its overall health. Muddying the waters further the latest PCE inflation number, which the Fed uses as a inflation targeting measure saw a fall to 1.3%, from 1.4%. This uncertainty places ever greater focus on next week’s April jobs report, but before that we have the latest ISM Manufacturing number for April, which is expected to show an improvement to 52.1 from March’s 51.5. Investors will have been comforted by the fact that we saw a rebound in Chicago PMI for April after two months of contraction as it rebounded to 52.3, from 46.3 in March. EURUSD – the euro posted its first positive month since June last year, reversing all of March’s losses in the process. This strong performance suggests we could well see a move towards 1.1500 in the coming weeks. Having been resistance for such a long time dips back to the 1.1050 should act as strong support. GBPUSD – a strong April performance for the pound as well which augurs well for further gains on a move through 1.5500. Next resistance sits at 1.5570 while support remains back towards the 1.5175 level and 100 day MA. EURGBP – having broken higher yesterday we’ve moved beyond 0.7300, and could well go further, towards the March and April highs at 0.7385. Any pullbacks need to find support at the 0.7235 area for this to play out. USDJPY – strong support remains just above the March lows at 118.30, while at the same time the rebounds keep getting shallower. We need to see a break above 120.20 to mitigate the downside risk of a move towards 116.50. 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.