As we head into the final trading day of the quarter, European markets look set to post their first positive week in six after three successive days of gains. Yesterday’s US economic data along with some soothing comments from New York Fed President William Dudley appear to have had the desired effect on the bond markets which have seen yields slide back and stocks recover some of their equilibrium. The wonder is it took investors so long to understand the Feds message. Even though Mr Dudley didn’t really say anything different to Mr Bernanke a week ago it would seem that the message is slowly starting to filter through that the prospect of any form of tightening remains some way off in the distant future. In Europe this morning we can expect to see stocks open slightly lower as investors do some last minute portfolio readjustments as we head into the end of the week, month and quarter and also set to post the first negative month of 2013. In Asia overnight it was a busy session with the Nikkei boosted by a significant improvement in Japanese industrial production and retail sales data for May. We also saw a significant improvement in housing starts, up 26% and construction orders, also up 26%, well above expectations, which would seem to suggest that the stimulative effect of the new governments “Abenomics” program is continuing to have the desired effect, helping boost economic activity, which is even more important given some scepticism of the so called “third arrow” of new PM Shinzo Abe’s reform program. To help in this regard the new government needs to be able to do well in the upcoming upper house elections next month, which Mr Abe really needs to win to be able to push on with his reform program. As far as data releases in Europe are concerned, following on from yesterday’s better than expected German unemployment data for June, and the improvement in consumer confidence earlier this week we may get to see if that translates into the latest retail sales data for May, which is expected to show a rise of 0.4%, while CPI is expected to edge back up in June to 1.8% from 1.6%. Back in the US we have the latest Chicago purchasing managers’ report for June which is expected to slip back slightly from 58.7 to 55.1 while the final University of Michigan sentiment number is expected to hold onto last week surprise jump, improving even further to 83.1. EURUSD – closing below the 50,100 and 200 day MA supports between 1.3070/85 earlier this week, suggests we could well see a move towards trend line support at 1.2950 from the 1.2045 lows last year. To stabilise the euro needs to get back above the 1.3090 to have a crack back towards last Friday’s highs at 1.3250. GBPUSD – the pound continues to drift lower pushing below the 100 day MA at 1.5310 and with it raising the prospect of further losses towards trend line support at 1.5080 from the 1.4835 lows this year. To stabilise we need to get back above this level to push back towards the 1.5400 area. EURGBP – having held at the firm support at the 0.8470 level the euro looks set to once again retest the top of the recent range. The broad range trade continues to confine the price action with resistance remaining anywhere near to the 0.8600 level. USDJPY – the US dollar appears to be starting to find some traction above the 98.00 level as US bond yields drift off their highs. The key level on the topside remains the 99.20 area and 50 day MA. The top of the cloud resistance continues to move away now at 101.25 with the base of the cloud at 98.15 and while we struggle to move higher we remain at risk of a pullback towards 95.80. CMC Markets is an execution only 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.