Spain will be the focal point of the markets today given that it will not only be hosting the monthly ECB council rate meeting in Barcelona, but will also be holding its first bond auction since being clobbered by a two notch downgrade by ratings agency Standard and Poor\'s last week, and a host of bank downgrades this week.
This week\'s economic data has painted a worrying picture of an economy buckling under the strain of austerity, rising unemployment, as well as a lot of distressed lending, as the country dropped back into a double dip recession.

Today\'s medium term Spanish bond auctions will be a key test of investor appetite outside the Spanish banking sector for demand for Spanish debt, with 10 year yields once again edging back towards the 6% level.
France will also be looking to sell bonds today with the likelihood that this will be the last debt sale under President Sarkozy\'s watch, before the weekend elections.

Comments made last week by Mario Draghi, the ECB chief, about some form of "growth compact" has prompted speculation, probably misplaced, that the ECB might give some clues about plans for another LTRO or some other form of help for a very sickly European economy.

It is more likely that Draghi will revise downwards the ECB\'s growth forecasts, as well as give more details about any trickle-down effect from the recent LTRO\'s.

The UK continues to set itself apart from European PMI data with construction PMI coming in well above 50 yesterday at 55, yet if the ONS is to be believed this is the sector that was the biggest drag on GDP in the last quarter.
Today\'s April Services PMI is expected to follow in the footsteps of its smaller manufacturing and construction siblings and remain in expansion territory as Q2 gets under way, coming in at 54.1, down slightly from March\'s 55.3.
Despite these PMI figures it seems likely that speculation will continue about further QE ahead of next week\'s Bank of England rate meeting, especially after yesterday\'s money supply figures.

In the US yesterday\'s disappointing ADP numbers for April have reignited concerns about the US labour market especially after the disappointing Non-farm payrolls numbers in March. The drop to 119k has focussed the markets attention on tomorrow\'s April payrolls number, and with the Fed apparently looking increasingly split on the matter of further stimulus or the prospect of it, further QE probably isn\'t as likely as markets think it might be.
Today\'s weekly jobless claims are expected to remain around the 380k level, still well below the 400k level that could be seen as a psychological pressure point.

EURUSD - still in the broader range the euro remains capped at trend line resistance at 1.3285 from the March highs. It would seem patience is the order of the day as we continue the sideways consolidation seen since mid-February. A break through 1.3300 targets the 200 day MA at 1.3475.
With the lower line support on the triangle now at 1.3050, we need a break-out soon or the impulsive nature of the pattern will reduce.
The break of the triangle continues to remain the primary pattern and could well signal a 500 point move if it breaks out.
To open up the lows this year at 1.2630 we need to see a concerted break below 1.2975.

GBPUSD - another negative day for the pound but it continues to hold up relatively well, despite a lower low at 1.6160.
The positive momentum remains intact but does appear to be waning given the proximity of the trend line resistance at 1.6320 from the 2011 highs at 1.6750.
This suggests we could see a downward test towards 1.6050 and the highs at the beginning of April.
Only a move below 1.6050 retargets the long term trend line support at 1.5940 from the January lows at 1.5235 which continues to act as support on the downside.

EURGBP - another strong down day yesterday brings us closer to the 2010 lows at 0.8065.
Over the past week every rally has been aggressively sold into hence the long upper shadows in the daily candles
The momentum as such remains for a move towards the 2010 lows at 0.8065. A break here would be very negative for the euro, opening up levels last seen in October 2008, when it touched 0.7700.
Only above the resistance at 0.8220 would retarget the larger resistance at 0.8280 as well as trend line resistance at 0.8300 from the February highs at 0.8505.

USDJPY - the failure to hold above 80.45 yesterday keeps the risk tilted towards the downside, however while above the 79.70 level lows of this week there is a chance that the US dollar could stabilise.
A failure to get above the weekly cloud resistance keeps the current momentum skewed towards the downside. A break below 79.70 would then target 79.20 initially on the way to 78.35 and the 200 day MA.
The 80.42 cloud line should now act as a resistance level and for the dollar to stabilise we would need to see a close back above this key level.