Having endured a fairly lacklustre session yesterday, we could well be set for more of the same today, given the speculation about the likelihood of an imminent announcement of a fresh round of sanctions by the EU, as policymakers finally grasp the fact that to be taken seriously they may have to endure some economic pain of their own. There appears to be a growing realisation that the EU needs to shift the cost/benefit analysis for Putin and Russia to deter further aggressive steps lest it send the signal that the EU response is more paper tiger, than actual tiger, and in the process infer that further interference in Ukraine’s affairs, carries with it the potential for a further tightening of the screw. The key question at the moment will be whether or not EU leaders have the stomach to follow through on them in full, with full details set to be published tomorrow. Against that backdrop investors yesterday appeared to be keeping their proverbial powder dry in preparation for a US data avalanche, starting tomorrow with the July ADP employment report, the latest FOMC decision and preliminary Q2 GDP reading. As for today Europe’s markets look set to open higher despite some Japanese retail data that suggests that the Japanese economy is starting to lose some momentum. For today the focus is set to be on the UK economy this morning with the latest consumer credit and lending data for June. The recent slowdown in the housing market has resulted in a slowdown in the amount of mortgage approvals in recent months as the new credit curbs which came in April started to impact demand for new loans. Expectations are for a slight uptick from 62k to 63k, while net lending to individuals is expected to slow to £1.9bn in June. Consumer credit is expected to come in at £0.8bn. Money supply data, (M4) is expected to remain weak for June, which will reinforce expectations that rates are unlikely to rise any time soon, despite the optimism surrounding the UK recovery, which could well hasten the recent weakness seen in the pound on the FX markets. As an appetiser for tomorrow’s US data we get the latest US consumer confidence data for July and this is expected to show an increase to 85.5 from 85.2. In recent months there has been little or no sign that this indicator has fed through into increased consumer spending and a correlation with retail sales growth, with aggregated retail sales for Q2, actually coming in below the aggregated retail sales for Q1. EURUSD – a fairly tight range yesterday but we still look weak with the prospect for a move towards the November lows at 1.3300 remaining. We have resistance at the previous lows at 1.3475, but would need to see a move back through 1.3500 to retarget the 1.3570 level and then on to 1.3640. GBPUSD – after eight successive down days in a row the pound managed to hold above the 50 day MA and support between 1.6950 and 1.6970, but the lack of rebound is a concern. A break through 1.6950 could well trigger a sharp roll over towards 1.6845 and the 100 day MA. We need to see a rebound back through 1.7030 to stabilise in the short term and argue for a retest of 1.7100. EURGBP – the bias remains towards the downside with support at the 0.7870/75 area. The euro needs to overcome last week’s high at 0.7940 and then trend line resistance at from the highs in March at 0.7990, to stabilise. The pressure remains for a move towards 0.7780, with any rebound needing to overcome the 0.8000 level to stabilise in the short term. USDJPY – the current rebound continues to find resistance at 102.00 where we have cloud resistance. Even if we move through here we also have trend line resistance at 102.45, from the 105.50 highs, posted at the beginning of 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.