While European markets posed impressive gains and outperformed in the first quarter of 2015, US stocks lagged somewhat behind as concerns about the a slowdown in the US economy, and an indecisive Federal Reserve prevented a stronger performance with the S&P500 closing the month lower. The German DAX and other European markets closed higher for the third month in succession, though yesterday saw a sharp sell-off across all stock markets as profit taking kicked in on concerns that, despite ultra-loose monetary policy, economic data continues to disappoint and profits likely to fall short with the latest US earnings season due to start after Easter next week. The weakness yesterday looks set to spill over into a weaker open this morning with the situation in Greece no nearer coming to a conclusion, and an increasing number of eminent voices arguing that a Greek exit from the euro may not be such a bad thing, after the latest list of Greek reforms was rejected as more of a “wish list” than a credible program. Concerns about a slowdown in China and weakness in commodity prices weighed on the FTSE100 yesterday, along with a stronger US dollar, but there were also wider concerns that despite these unprecedented attempts by global central banks to stimulate their economies, strong growth continues to remain fairly elusive. This morning the final Chinese manufacturing PMI’s for March illustrate this problem quite clearly with the latest HSBC measure coming in at 49.6, though the official measure did rebound slightly, coming in at 50.1 These weak readings are likely to push the Chinese authorities further in easing policy, but are likely be of limited use given that their counterparts elsewhere in Asia are likely to be doing the same thing. The weak Japanese data earlier today from the Tankan survey are likely to put further pressure on the Bank of Japan to implement further stimulus measures. We also got some mixed economic data on both sides of the Atlantic yesterday, though there were some bright spots, with German unemployment falling to a record low and US consumer confidence jumping sharply in March. Unfortunately these numbers belie the wider concerns elsewhere in Europe, and in the US economy. Germany continues to remain the most robust European economy helped in no small part by the weaker euro and lower oil prices, and as such is best placed to take advantage of the recent actions of the European Central Bank. This morning’s final manufacturing PMI numbers for March are expected to reinforce that with a reading of 52.4, with Spain also expected to post strong numbers with a reading of 54. Italy is starting to show some improvement with a reading of 52.2 expected, but the unexpected rise in the unemployment numbers yesterday, particularly the youth unemployment numbers suggests that there remains a long way to go. Likewise with France, which also has very high unemployment levels and its manufacturing sector is expected to remain in contraction at 48.2, heaping more pressure on its beleaguered President François Hollande. The UK economy is also expected to come under particular scrutiny after yesterday’s timely upgrades to the GDP numbers for 2014 and Q4, given that the General Election campaign is now under way in earnest. The latest March PMI numbers are expected over the next few days and will give clues important clues as to how well the UK economy has done in Q1 of this year. Starting today with the latest manufacturing PMI numbers for March, which is expected to round off a fairly positive quarter for this sector, with an improvement to 54.5 expected from 54.1, and an average reading over the quarter of 53.9. We finish up the day with the latest US ADP employment report for March which is widely seen as a barometer of the more closely scrutinised payrolls report later in the week. The US jobs market continues to remain fairly resilient with 227k new ADP jobs expected to be added for March, unfortunately while all these new jobs appear to be being added, the rise in jobs doesn’t appear to be translating into the rest of the economy. The US consumer appears reluctant to spend with retail sales and durable goods weak, and personal spending low, despite lower oil prices. Furthermore yesterday‘s Chicago PMI contracted for the second month in a row, which could spell trouble for today’s ISM Manufacturing report for March. Expectations are for a slight fall from February’s 52.9 to 52.5, but given the weakness in the Chicago number there is a risk of disappointment. EURUSD – yesterday’s break below the 1.0780/90 area opens up the prospect of a move towards 1.0600 area. To stabilise the euro needs to push back above the 1.0800 area and argue for a retest of 1.0900 and potentially the previous highs at 1.1050. GBPUSD – currently finding support at the 1.4750 level, we can’t seem to rally much beyond 1.4870, which keeps the risk of a move towards the lows at 1.4630 on the table. We need to push back above 1.4900 to argue for a return towards the 1.5000 level. EURGBP – last week’s bearish daily reversal keeps the pressure on the downside while below last week’s high at 0.7385. Yesterday’s break below the 0.7280 level argues for a return towards 0.7200, with intraday resistance at 0.7340. Above 0.7400 argues for a move towards 0.7500. USDJPY – last week’s rebound from the 118.30 level needs to get back above trend line resistance at the 120.60 level to suggest a retest of the previous highs at 122.00. With the US dollar currently struggling we can’t rule out a retest of the 118.30 area. CMC Markets is an execution only service provider. 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