US markets have continued to go from strength to strength this week closing again at record levels yesterday, though the underperformance of the Russell 2000 continues to perplex. Once again some encouraging economic data has kept investors viewing the US economy through the prism of a glass half full. A blow out Philadelphia Fed manufacturing number for November, a 21 year high of 40.8, tempered a slightly disappointing manufacturing PMI and weekly jobless claims starting to head back towards the 300k mark. Even European markets look set for a positive week despite some pretty disappointing economic data at the back end of the week, though they are still underperforming relative to US markets. Yesterday’s disappointing flash PMI numbers for Germany and France point to an economy that is stuck in neutral at best, while both Japanese and Chinese manufacturing PMI also came in shy of expectations reinforcing the former’s decision to boost its QE program a few weeks ago. All of this points to two out of the three trading blocs in the world struggling to recover, while the US continues to outperform with the only question on most people’s lips being how long can the US maintain its current progress, while Europe and Asia continue to underperform, without suffering some sort of drag effect. Today’s European market action is likely to see a slightly firmer start with a fairly light day on the economic data front, though we could well see some tension surrounding Greece’s 2015 budget which could well steal some headline space as Prime Minister Samaras puts the proposed budget to the President of the Greek parliament this morning. There remains significant disagreement between Greek policymakers and the troika regarding about a supposed fiscal gap, which if no agreement is reached between the two could delay its next aid instalment on December 8th. ECB President Mario Draghi is scheduled to make a speech at the latest European Banking Congress on the subject of “Reshaping Europe” where I’m sure he will remind us all that the ECB remains prepared to do more to help the economy within its mandate. Later we’ll also hear from Bundesbank chief and fellow ECB governing council member Jens Weidmann, as the tug of war goes on within the ECB about whether to do full blown QE. Expect to hear comments from German finance minister Wolfgang Schaeuble as well. On the economic data front the UK economy continues to blow a little hot and cold, after retail sales data for October showed a gain of 0.8%, well above expectations of 0.3%. These gains were helped in part by discounting and lower prices on food and fuel as supermarkets continued to slash margins in an attempt to maintain market share. Today’s public sector borrowing numbers for October are also expected to show a marked improvement from September’s £11bn, with an expectation of a figure in the region of £7bn. EURUSD – the euro still feels like we could well be set for a break higher. A concerted break above the 1.2580 area, through 1.2600 could well see a move towards the 1.2800 level. There are a few bids at the 1.2500 level while the 1.2400 level remains a key support and obstacle to further declines towards the 1.2355 level and the 1.2040 lows. GBPUSD – the pound continues to trade in a broad range between 1.5735 and 1.5590, with a break either side determining the next move. Below 1.5590 targets 1.5430 while a move through 1.5750 could well see a move towards 1.5880. EURGBP – the recent rally looks to have run its course unless we can overcome the 200 day MA at 0.8050 along with trend line resistance from the September highs at 0.8040. A fall back below the 0.7980 level would confirm and argue for a move towards the 0.7940 area. USDJPY – a new high at 118.98 yesterday has seen the US dollar drift back with a gravestone doji on the daily chart. Is this another false top or could we be set for a pullback? Trying to pick the top here has proved expensive with the outside range day on Monday proving misleading. The US dollar still appears to be well supported for its move towards 120.00 on the dips with 115.40/45, the low this week likely to be a key support. 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.