A combination of escalating violence and unrest in Ukraine at the weekend, as well as a disappointing Chinese HSBC manufacturing number saw European markets come under pressure yesterday, in the absence of UK markets. The poor Chinese number, in particular is unlikely to assuage concerns about the health, or otherwise of the Chinese economy, as we saw the fourth monthly contraction in succession. Away from China, a breakdown in law and order in certain regions of the Ukraine have prompted rising concerns that Russia might feel compelled to intervene, in the event that the situation spirals completely out of control. For now markets seem to be fairly sanguine about events in the country but the spread of violence into the south west of the country in Odessa suggests the potential for much more unrest in previously unaffected areas, and that would be a major concern. US markets proved a touch more resilient to these concerns, finding support from a better than expected services ISM number for April, with new orders in particular showing a strong spring bounce back. A strong number really shouldn’t have been too much of a surprise given Friday’s strong non-farm payrolls number, which saw a rise of 288k jobs in April. With data fairly light yesterday and volumes low, the return of UK markets from their long weekend break should see a little more volume today with particular attention on economic data from across Europe as well as the most important PMI number of all as far as the UK economy is concerned, that of services PMI for April, in the wake of a pretty good first quarter for the UK economy. With both manufacturing and construction PMI showing fairly strong readings for April last week, a similarly strong April services PMI number today is likely to bode well for a similarly positive quarter for growth in Q2. A good number is also likely to prompt some vigorous debate at this week’s Bank of England rate meeting about the timing of a potential future rate hike. Even if it doesn’t, the minutes in a few weeks’ time could well make for interesting reading. Expectations are for an increase to 57.9 from 57.6 in March. Lagging some way behind, the recovery in Europe continues to labour along in first gear. Last week’s manufacturing PMI numbers were alright, but concern still surrounds France, Europe’s second biggest economy with a stagnant manufacturing number likely to be matched by a similarly lacklustre services number. France services PMI is expected to come in at 50.5.Germany and Spain are expected to continue their recent improvement, coming in at 55 and 54.3 respectively, though Italy may also show some progress, but still remains on a par with France, around 50.5, from 49.5. Having seen a rise in unemployment in the first quarter of this year we get the latest Spanish April unemployment numbers and these are expected to show a drop of 51k. With the main tourist season about to get underway it is to be hoped that these numbers will continue to drop over the next few months. The main corporate story of the week is likely to be speculation about the next move in the Pfizer/AstraZeneca bid story as politicians on both sides of the Atlantic start to get involved. EURUSD – the euro continues to trade range trade in a fairly tight range with a lack of any conviction in either direction, remaining well short of the March highs at 1.3970, and the April high at 1.3905. The main support remains at long term trend line support from the lows last year at 1.3800. A break below the April lows at 1.3675 could well see a move towards 1.3500. GBPUSD – last week’s high at 1.6915 brought the pound ever closer to the August 2009 highs at 1.7045, with any pullbacks now likely to find support at 1.6780. While above 1.6780 the risk odds favour further gains and as such this level continues to remain important with respect to further progress. While below here the risk of a pullback towards 1.6555 remains a possibility, on a break below 1.6670. EURGBP – the euro continues to find support at around the 0.8200 area and last month’s lows at 0.8197 but the lack of rebound suggests we could well go lower. It needs to overcome 0.8250 to suggest a retest of the 0.8300 area, where there is strong resistance. While below the 0.8250 level the risk remains for a move towards the lows this year at 0.8158. The resistance at the 200 day MA at 0.8380 remains a key obstacle to further gains. USDJPY – last week’s failure to close above 102.80 saw the US dollar slide back. We need to see a close above the 102.80 level to suggest a move back to the highs at the beginning of April at 104.10. We have solid support at the 101.20 area and the March low. A move through 101.20 opens up the 200 day MA at 100.90, a break of which could well see a move towards 98.60. 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.