US markets headed higher again yesterday after a weak start as New York traders looked out of their windows, saw the snow coming down and concluded that despite a weak January retail sales number, all was right with the world and carried on buying stocks, on the basis that the data would quickly bounce back once the snow and ice had melted away. As we head towards the end of a week dominated by central bank forward guidance and the promise of low interest rates for the foreseeable future from the Bank of England and the Federal Reserve, over market fears over a premature tightening of monetary policy, it is somewhat ironic that in Europe the call is for further cuts in interest rates and other extraordinary measures, in an attempt to shore up a feeble and weak recovery. Today’s Q4 GDP data from Europe is likely to reinforce the image of a two or three speed Europe with Germany still leading the way, with some signs of a slowdown, with Spain and Italy lagging behind, while France tries to keep up puffing away at the back like a smoker trying to run a marathon. Expectations for the latest French Q4 GDP estimate is expected to come in around 0.2%, well down from the Bank of France’s estimate of 0.5%, though up from -0.1% seen in the previous quarter. It would be highly unlikely if the Q4 number is as high as the Bank of France’s rather optimistic assessment, given how poor recent PMI data has been, having been well below 50 for months. Then again given the bloated nature of the French state anything is possible. Soon after the latest German Q4 GDP numbers are expected to come in at 0.3%, unchanged from the previous quarter, and unlike France their recent PMI data has been well above 50 for quite some time now with annualised growth expected to double to 1.3%, and it is the German economy that has helped contribute the most to the euro area emerging from recession in the middle of last year. That is not to underestimate the recent rebound in Italy and Spain’s growth numbers, but the latter has been achieved at great cost to levels of employment, while Italian growth is pretty much as stagnant as its numerous non-functioning governments. As Italy looks to put up its third unelected Prime Minister in a row, in as many years, the Italian economy looks set to eke out 0.1% growth in Q4, however its government debt is also likely to grow as well from the current €2.1trn, and 133% of GDP. Whether the politically inexperienced Matteo Renzi is able to succeed where Mario Monti and Enrico Letta failed is open to debate, but the omens aren’t good given the same dysfunctional political backdrop. The euro area as a whole is expected to register an increase in Q4 GDP, with growth coming in at 0.3%, up from 0.1% in Q3; however any sort of miss on the headline numbers to the downside is likely to crank up the pressure on the ECB and Mr Draghi to try and enact further measures to help underpin the current weak and feeble recovery. In the US it seems quite likely that the recent cold weather could well affect the latest industrial and manufacturing production numbers, given that the weather has had an adverse effect on pretty much every other indicator including payrolls, and yesterday retail sales. Expectations are for a rise of 0.3% and 0.2% respectively, but it wouldn’t be a surprise if the numbers fell short. EURUSD – the euro continues to range trade below the 1.3700 resistance area, with the main support remaining down near 1.3475/80. Above 1.3700 we still have long term trend line resistance at 1.3845 from the all-time highs at 1.6040 and ultimately this remains the key obstacle to a move through 1.4000. The onus remains towards the downside while last month’s bearish engulfing candle on the monthly charts remains valid. GBPUSD – we’ve made a marginal new high at 1.6673 yesterday as we close in on the 2011 highs at 1.6745. Support now resides near the 1.6510/20, and then below that at 1.6420. EURGBP – we appear to have found a bit of a short term base just above the 0.8160/70 area, but the bias continues to remain for a move to 0.8065 and the 2010 lows. Pullbacks are likely to find resistance around the 0.8270 area and 0.8330. USDJPY – this morning’s move below 101.80 would seem to suggest that a move back to 103 may well have to wait as we head back towards the twin lows at 100.80. If we are able to sustain this move below 101.80 the risk is we get a test of the 200 day MA at 100.20. Above 103 retargets 105.50 and the highs this year. 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.