As US markets once again finished the week on the up and at record highs again the exuberance of US investors appears in contrast to European investors who appear to be adopting a slightly more cautious approach. Yes the DAX made record highs last week, but the enthusiasm to drive it higher appears slightly more tempered, not surprising given concerns about rising oil prices and events in Iraq, which show no signs of diminishing. This morning markets in Europe were set to open slightly higher after the latest Chinese HSBC manufacturing PMI, came in at 50.8, up from the previous 49.4, and the first expansion in six months. Given this reading maybe recent measures by Chinese authorities, to stimulate the economy by targeted bank reserve requirements cuts, appear to be starting to have an effect. Having seen the ECB loosen monetary policy into the realms of the experimental earlier this month, the focus of attention now turns back to the question of economic data. In this context markets will be particularly focussed on the resilience or otherwise, of the French and German economies in the second quarter of this year, though the effects or otherwise of this month’s action could well take some time to be felt, if they are felt at all. As we come to the end of Q2 concerns about France’s economy in particular have started to concentrate minds in Brussels as well as Berlin as French officials, strive to meet EU mandated budget cuts at the same time as trying to fire up an economy starting to slide back into contraction In a sign that old interventionist habits die hard, last week the French government intervened once again to prevent a take-over of Alstom, taking a 20% stake in the ailing company along with GE, in an attempt to turn the business around. Given recent disappointing PMI data from both the manufacturing and services sector you would have thought that French ministers would be more interested in trying to implement the type of economic reform that has the ability to boost their economy, given that the latest PMI data due out this morning was expected to show contraction in June. In any event the numbers came out even worse than expected at 47.8 and 48.2. Manufacturing was expected to come in at 49.6 and services at 49.5. In Germany there also appears to be some evidence of a slowdown in comparison to the first quarter, though it is not expected to be anywhere near as marked as France. Services PMI is expected to come in at 55.8 and manufacturing at 52.7. EURUSD – the euro continues to trade in a range with support still above 1.3500, though last week’s move above 1.3600 ran out of steam at 1.3645. Nevertheless the risk remains for a move towards 1.3675, while above Fridays low at 1.3560. We also have key trend support from the 2012 lows at 1.2045, which now comes in just above 1.3465. GBPUSD – last week saw the pound close above 1.7000 for the first time since 2008, with the risk for a move towards 1.7330 the 50% retracement of the decline from the 2007 highs at 2.1160 and the lows at 1.3500 in 2009. Ideally we need to see a monthly close above 1.7000 for this to unfold but while we remain above 1.6910, further upside seems likely. We also have intraday support at 1.6990, while the major support lies all the way back at the 100 day MA at 1.6725. EURGBP – the 0.7960 area continues to hold the downside and as such we remain at risk for a pullback towards the 0.8085 area if we sustain a move above 0.8035. Support remains near the lows at 0.7960 and while this holds we remain at risk of a further pullback, with a slightly bullish daily candle last week. The pressure remains on the downside while we remain below trend line resistance from the March highs sitting just below the 0.8110 level, with a longer term target at 0.7880. USDJPY – still in a range with support around the 101.60 area and the 200 day MA, with a move back through the 200 day MA needed to retarget the range trade lows of this month near 101.00. The range highs remain anywhere below the 103.00 area and last weeks high at 102.75. 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.