06:10BST Wednesday 15th April 2015 The first couple of days this week have seen a rather slow start for European markets with a little bit of a pullback after the strong gains of last week. The exception to this minor pullback has been the resource heavy FTSE100, which now it has gained some traction above 7,000, seems to be quite comfortable for the moment with yesterday seeing mining stocks perform fairly well. After the surprise of Monday’s pretty awful Chinese trade data, all eyes were fixed on this morning’s latest Q1 GDP numbers, as well as the latest industrial production and retail sales data for March. In the wake of Monday’s data these numbers were every bit as disappointing as we’d expected them to be, and that in itself is likely to result in further easing measures from Chinese authorities in the coming weeks and months, and it is this prospect which has, in the old bad news is good news kind of way that we’ve become used to, driven Hong Kong and Shanghai markets to multi year highs, over the past few days and weeks. Chinese Q1 GDP was reported at 7%, pretty much in line with expectations, and well down from 7.3% in Q4, but the internals were even more worrying. March industrial production slid from 7.9% to 5.6% year on year, missing expectations of a decline to 7%, and in a sign that internal consumption continues to remain weak retail sales also declined sharply from 11.9% to 10.2%, also missing expectations of a drop to 10.9%, and its slowest pace in nearly a decade. European markets saw a brief pause yesterday after last week’s strong gains ahead of today’s ECB rate meeting, however they look set to start on the front foot this morning, against the backdrop of this morning’s disappointing Chinese data. With the start of the IMF and G20 gatherings in Washington on Thursday, we have the unusual prospect of the latest ECB rate decision and press conference on a Wednesday this week, and while we aren’t expecting any surprises just over one month in from the beginning of the ECB’s quantitative easing program, the questions are already being asked as to whether the program will last into 2016. At last month’s meeting in Cyprus, ECB President Mario Draghi was keen to talk up the success of his fledgling new easing program, despite the fact that most of the economic improvement being seen in the most recent data has been as a result of the lower oil price, and the decline of the euro, prior to the start of the program. Draghi’s biggest problem now will be convincing those sceptics in the markets that it will still be needed if the economic data continues to improve, particularly given concerns about the rising increase in the number of negative yielding bonds, which could cause a shortfall in bonds for the ECB to buy, if it continues. We already know a number of members on the council would be only too happy to see the program end early, a point that was hinted at by ECB executive board member and Luxembourg bank chief Yves Mersch in comments earlier this week to a German newspaper. This shouldn’t be a problem while inflation remains weak with the latest German CPI number for March expected to be confirmed at 0.1% today, and the latest EU measure remains negative when it is released on Friday. Back in the US, anyone hoping for a strong rebound in March retail sales came away slight disappointed, as they missed expectations of a 1.1% rebound, coming in at 0.9%, once again casting doubt on the resilience of the US economy in Q1. With numerous Fed officials seemingly convinced that the recent weakness is transitory tonight’s Fed Beige Book is likely to confirm the weaker readings seen in some of the weaker regional manufacturing readings like the Philly Fed and Empire manufacturing data. Today’s April Empire manufacturing data is expected to improve slightly, to 7.2, from 6.9, but it has been weak throughout most of Q1, however March industrial production is expected to decline 0.3%, as Q1 GDP expectations continue to get revised lower. EURUSD – having failed to break below the 1.0500 level we got a strong rebound back to the 1.0720 area. The strength of the move has seen us post a fairly bullish daily candle, which could if we break through the 1.0760 level suggest a return towards 1.0900. GBPUSD – yesterday’s recovery back through 1.4740 to 1.4800, from the 1.4565 lows has stabilised and could suggest a rebound back towards the 1.5000 level. For this to unfold we need to hold above the 1.4680 level. A decline back through 1.4700 towards 1.4565 keeps the risk for a revisit of the 2010 post-election lows at 1.4230. EURGBP – yesterday saw a rebound from the 0.7180 level, and subsequent squeeze back to the 0.7235 area. The risk remains for another leg lower towards 0.7150 while below the 0.7280 level. USDJPY – having found support at 119.05 yesterday after breaking below 119.70 the US dollar remains stuck in a range but needs to move conclusively above the 120.70 level to retarget the highs at 122.00. Trend line support currently sits down at the 119.00 area. CMC Markets is an execution only service provider. 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