The first week of December is set to be a key week for financial markets with a whole host of important economic data announcements, central bank meetings and policy statements which investors will have to digest as we head into year end. Having seen November Chinese manufacturing PMI data improve over the weekend the hope is we see a similar trend in Europe and the US today. This week we not only we have manufacturing data from all over Europe, the UK, the US and China, but we also have central bank rate meetings in Australia, Canada, Europe, and the UK, the latest Autumn Statement from the UK Chancellor, as well as key US unemployment data at the end of the week. We start the week off in Europe as we have done for most of this year as policymakers here grapple with a debt crisis which has crippled economic performance from the southern periphery to the northern core. Today’s latest Eurogroup meeting will be focussing on finessing the latest details of the Greek bailout, particularly the controversial voluntary debt buyback scheme on the remaining €60bn of bonds still in private hands, the success of which will determine the outcome of the latest bailout plan. Given that these private bond holders have already seen their holdings undertake a haircut once already this year, they could well resent being asked to take yet another loss on their holdings, while EU governments continue to refuse one of their own. The poor performance of the European economy for November is also expected to be confirmed today by the final Manufacturing PMI’s for France, Germany, Italy, Spain and the Eurozone area as a whole. There is an expectation of slight improvement in Spanish and Italian PMI albeit from a very low level with Spanish PMI expected to improve from 43.5 to 43.9, which Italian PMI is also expected to improve to 46 from 45.5. French, German and Eurozone manufacturing PMI’s are expected to remain unchanged at 44.7, 46.8 and 46.2 respectively. These recessionary levels of economic activity and output highlight the problems facing Europe’s leaders, which they seem increasingly oblivious to. They refuse to acknowledge the reality that Greece remains insolvent, and no amount of fiddling around the edges will fix its finances. Meanwhile the lack of any policies to tackle rising unemployment and falling economic activity continues to take a back seat to the question of who gets bailed out next, with Cyprus the next in line. In the UK the latest manufacturing PMI for November is expected to show a small improvement to 48.1, from October’s 47.5, with the weak activity in the sector expected to focus the markets attention on Wednesday’s Autumn Statement where the Chancellor of the Exchequer, is expected to have to shift his targets for a balanced budget further out into the decade as economic activity continues to underperform and tax revenues decline. In the US while the main focus remains on the deadlocked fiscal cliff negotiations, which continue to roil the markets in both directions, the economy continues to tick along slowly, though this afternoon’s ISM Manufacturing reading for November could take a hit from last month’s storm related events caused by Sandy. Analysts do appear to be underestimating the effects of last month’s storm though, if their predictions are anything to go by, predicting that activity for November will drop from 51.7 in October to 51.5. EURUSD – Friday’s rally through 1.3000 ran into a wall at the 1.3030 level, matching the 31st October highs, but falling shy of trend line resistance at 1.3060 from the highs this year at 1.3360 before slipping back below the 1.3000 level late on. A break and close above 1.3020 has the potential to retarget the September highs at 1.3175. For the downside to open up again we need to see a break back below the 50 day MA and 1.2900 retargets a move towards the 200 day MA at 1.2790, while below that we also have trend line support from the 1.2050 lows which now comes in at 1.2770. GBPUSD – the pound continues to struggle to get through the resistance at the 50 day MA at 1.6060, while behind that we also have 1.6080 channel line resistance from the 1.6310 highs. Only above 1.6100 has the potential to target 1.6200 and the October highs. A fall through 1.5960 could well see a move towards 1.5835 trend line support from the 1.5270 lows, as well as 1.5660. EURGBP – we saw the euro post a new November high on Friday, which keeps the focus on for a test towards the October highs at 0.8165 as the next resistance. This move higher could well be undermined by a move below the 0.8100 level towards the 200 day MA support at 0.8050. Also on the downside we have trend line support at 0.7995 from the July lows at 0.7755. USDJPY – we saw another test of the 82.80 level last week and this remains the key barrier to a move towards the March highs above the 84.00 level. Support remains at the 81.70/80 level and this remains the key level for this scenario to unfold. A break below the interim support at 81.70/80 has the potential to target a move towards the 80.50 and weekly cloud level support. Only below the 80.50 level suggests a move back towards the November lows at 79.00.