As we head into the final month of 2015 it is startling how little has changed with respect to what financial markets have been focussing on from this time 12 months ago. A year ago there was speculation about what the ECB might do at its December meeting, while OPEC had just concluded a meeting that disappointed expectations, while we also had concerns about Chinese growth in the wake of what turned out to be the first of, so far six policy easing’s, and finally when the US Federal Reserve would start to raise rates. Today European markets look set to get off to a decent start in the wake of the latest Chinese manufacturing and services PMI data for November, which once again was disappointing from a manufacturing point of view though services was slightly improved.. The manufacturing numbers came in at 49.6, down from 49.8, while the services numbers showed a reading of 53.6, up from 53.1, which was more encouraging given all the positive noises coming out of China during Singles Day at the beginning of November which saw spending records broken. It appears that the big Chinese spendathon did have a positive effect on the Chinese economy. The Caixin manufacturing numbers were slightly less upbeat coming in unchanged at 48.3. While US and UK markets more or less managed to maintain the gains they made in October, closing more or less unchanged on the month, the German and French markets continued to press higher during November with the German DAX posting its highest monthly close since May, on the back of an increasing belief that the European Central Bank is about to pull the trigger on another significant program of easing this week, at a time when it is widely expected that the US Federal Reserve could well move monetary policy in the opposite direction. This central bank policy divergence has sent the euro dropping sharply and pushed the US dollar to a seven month high against a basket of currencies, while it has also been an ugly month for commodity prices, with the Reuters CRB index dropping to its lowest level in over 30 years last month, led by big declines in copper, precious metals and crude oil, caused by the strength of the US dollar, as well as a surfeit of supply. This policy divergence has also acted as an anchor on US markets which have gone pretty much nowhere since the beginning of the year, but has managed to push the German and French markets up over 10% so far this year. Last month’s comments from ECB President Mario Draghi to “do what we must” has merely served to raise expectations further for this week’s ECB meeting, and there is a distinct possibility that markets are pricing in to high an expectation for this week given the divisions likely being played out behind closed doors in the governing council. With CPI inflation significantly higher than at the beginning of the year and starting to edge higher, along with improving economic data, there is a risk that markets are pricing in too much ahead of Thursday’s ECB meeting. Today’s final November manufacturing PMI data for Spain, Italy France and Germany is expected to confirm last week’s data readings of a four year high for the broader EU measure with improvements expected to Spain, Italy with France and Germany expected to post their best readings this year at 50.8 and 52.6 respectively. Unemployment is also expected to continue to fall with Italy unemployment for October expected to fall to 11.7%, with EU unemployment expected to stay unchanged at 10.8%. German unemployment is expected to remain at 6.4% for November. In the UK the latest manufacturing PMI for November is expected to show a slowdown in the sector after October’s sharp rise to 55.5. It would appear that the October rebound in output and new orders from the Middle East, Asia and the US is not expected to be sustained in November with a drop to 53.6 expected. It’s also a big week for US data culminating with the November employment report on Friday, with a decent number here potentially sealing the deal for a Fed move in just over two weeks’ time. Before that though we have a whole host of other data, and after yesterday’s sharp drop in November’s Chicago manufacturing PMI to 48.7 from 56.2, the spotlight once again falls on the woes of the US manufacturing sector with the release of today’s November ISM manufacturing number. An increase to 50.6 from 50.1 is expected but after yesterday’s surprisingly disappointing Chicago number this could well disappoint. In a sign that inflationary pressures remain non-existent prices paid are expected to tick up slightly to 40 from 39. EURUSD – continues to drift incrementally lower towards the March lows at 1.0460, with a break of that targeting 1.0120. We need to get back through 1.0720 area to argue for a retest of the 1.0820 area. If we do manage to get back above 1.0830 we could see a run at the 1.0980 area. GBPUSD – the pound continues to look soggy heading towards major support at the 1.4980 area. To stabilise we need to see a push back above the 1.5330 area to encourage the prospect of a move towards 1.5420. EURGBP – last week’s failure at the 0.7080 level keeps the pressure on the downside, and we need to overcome this to suggest a rebound towards 0.7150. While below the 0.7080 area the risk remains for a move back to the July lows at 0.6935. USDJPY – currently finding support above the 122.20 area and resistance at the 124.00 area. Above the 124.00 area suggests the possibility of a move through to the August highs at 125.30. Only a move below the 121.80 area would delay the prospect of this scenario unfolding. CMC Markets is an execution only service provider. 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