Investors continued to tread carefully yesterday with respect to taking on large amounts of new exposure to equities, as uncertainty continues to grow about a messy outcome to the Greece debt saga as we push up towards another deadline. Reports last night were doing the rounds of a high level meeting to thrash out the framework of a deal between IMF chief Christine Lagarde, ECB President Mario Draghi, EU President Juncker and German Chancellor Angela Merkel in Berlin, as speculation grew that a Greece default was a matter of days away, particularly after Greece Prime Minister Tsipras comments at the weekend. It’s unclear what could be achieved at such a meeting given that no-one from the Greek government was present, and given the divisions that still remain between the parties, which suggests any proposal could well take the form of an ultimatum. If investors were hoping that yesterday’s US data would give them a clearer picture of the US economy, they were in for a big disappointment as the data served to fog up the picture even further. Weaker than expected personal spending and the lowest rise in core inflation for more than a year, were offset by a better than expected ISM manufacturing report for May with the internals similarly positive. Ordinarily such a positive ISM report with all components returning positive outcomes would have been a cause for optimism, but they were completely divergent from Friday’s Chicago PMI report, and as such had most people scratching their heads. While manufacturing painted a rather mixed picture, the picture with respect to the US consumer remained one of caution as once again spending fell back sharply. The reluctance to spend in spite of low inflation and slowly rising incomes remains a concern. Yesterday’s European economic data turned out to be a bit of a mixed bag as May manufacturing numbers from Italy and Spain outperformed were better than expected on the one hand, but concerns remained that France remained in contraction, despite an improvement while Germany data came in below expectations. There was some bright spots, namely a pickup in CPI inflation in Germany, which in turn could cause problems within the ECB governing council over the current QE program if it prices continue to rise at their current rate, and prompt the Bundesbank to push back on current policy. Since the beginning of the year German CPI has gone from -0.3% to 0.7%, a turnaround of 1%, and if today’s May EU CPI number shows a similar jump in prices we could well see questions raised about the duration of the ECB’s QE program. Expectations are for a rise from 0% to 0.2%, but if we come in higher it could well become a lot harder for the ECB governing council to remain united against concerns about inflation rebounding strongly, particular given that we were back at -0.6% back in January. Unemployment numbers for May in both Germany and Spain are also due today with declines in both expected. A decline of 115k is expected in Spain which is likely to be most welcome given the current governments unpopularity, but it will still have to go some to make any sort of dent in the current 23% unemployment rate. German unemployment is set to stay at a record low of 6.4%. In the UK yesterday’s manufacturing PMI for May was slightly disappointing, improving modestly to 52 from 51.8, below expectations of a rise to 52.5. The weakness of the number has raised concerns that the strong pound is acting as a brake on the export capability of UK companies, which in turn could well hit the GDP numbers in Q2. It is most certainly a worry, but given that manufacturing makes up 10% of the UK economy it’s not the end of the world either. Today’s construction PMI numbers for May are also expected to improve modestly to 55 from 54.2, with the all-important services numbers due tomorrow. Also due out we have mortgage approvals for April which are expected to rise by 63.5k, from 61.5k in March. EURUSD – the euro continues to struggle failing to push back above 1.1000 yesterday before slipping back. It still remains above its May lows at 1.0820 and while it does so the risk remains for a move back through 1.1050, given the bullish monthly candle in April. GBPUSD – yesterday’s decline has brought the pound below 1.5200 and close to the 50 and 100 day MA between the 1.5155/65 area. A move through here has the potential to open up 1.5040 61.8% retracement of the 1.4565/1.5815 up move. EURGBP – the rebound seen at the end of last week suggests that further gains are possible towards 0.7230 initially and a return towards 0.7300. For this to unfold we need to hold above 0.7120. USDJPY – we continue to remain well supported, as the US dollar looks to close in on the 125.65 level, which we last saw in December 2002. Support remains down at 122.00, the previous highs, as well as the recent range lows between 118.30 and 118.65. CMC Markets is an execution only service 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.