Equity markets have been trading aimlessly this week with no clear direction one way or the other, though the decline of crude oil prices to two month lows last night, helped drag US markets down and close lower again. This week’s Chinese data deluge has painted a broadly downbeat picture with imports, inflation and industrial production all slipping back. There have been some silver linings but you have to look closely for them, and they do appear to be on the retail or consumer side. The latest October retail sales numbers did improve to 11%, from 10.9% in September, which is still below the levels we were seeing at the end of last year of 11.8%. Furthermore this modest improvement doesn’t really chime with the stories circulating out of China at the beginning of October during Golden Week about surging sales in the restaurant, cinema and travel sales sector. According to some reports turnover at restaurants and retailers totalled over 1trn yuan, during the seven days, which equates to over $156bn, so for retail sales to only improve 0.1% does seem rather at odds with the early October optimism. The risk now is that for all the optimism yesterday with respect to so called “Singles Day”, China’s answer to “Black Friday,” we’ve heard pretty similar headlines of record breaking sales with Alibaba breaking its singles day record of sales of $14.3bn, while another on-line retailer JD.com reported record transactions of over 20m, which all seems extremely promising, and also familiar to a month ago. Let’s hope it translates into a significant increase in November retail sales. In the UK yesterday’s economic data was very much a case of either glass half empty or glass half full. I prefer the latter interpretation in that unemployment fell to a seven year low of 5.3%, number of persons employed rose to another record high, and while average earnings rose by less than expected, they still remain well over 2% above CPI inflation, where the spread between the two has been since March. With the sales season and Christmas coming up that can only be good for the UK consumer, who could well find themselves much better off leading up to Christmas than at any other time in the last 7 years. On the data front today we have the final German CPI numbers for October, which are expected to come in at 0.2%, while industrial production is expected to decline 0.1% for September. With little in the calendar in the way of data, attention today is likely to be on various speeches by central bankers, starting with ECB President Mario Draghi this morning when he talks to the European Parliament. He wasn’t particularly forthcoming yesterday at the Guildhall about the future prospects for monetary policy, unlike some of his colleagues recently who have been speculating about an extension to the expiry of QE, an increase in the monthly amount, as well as further reductions in the deposit rate below -0.2% Will we get any additional insight, with respect to the December meeting, or will the ECB President play a straight bat and keep the markets guessing? Later this afternoon we also get to hear from a host of Fed speakers including Fed Chief Janet Yellen, Charles Evans, Jeffery Lacker and William Dudley, all voting members on the FOMC. This will be the first time we’ve heard from Ms. Yellen since last Friday’s bumper payrolls report so it could be instructive if she has any comments about firstly the jobs report itself, and secondly the sharp rise in the US dollar. EURUSD – the inability to push back above 1.0820 opens up the prospect of a retest of the March lows at 1.0460. If we do manage to get back above 1.0830 we could see a run at the 1.0980 area. GBPUSD – having made a low of 1.5027 the pound is squeezing higher but we need to get back above the 1.5230 area to suggest a move through to the 1.5300 area. The 1.4980 area remains a key area on the downside. EURGBP – it would appear that last week’s bullish reversal may have been a dead cat bounce. If we slip below 0.7040 then we could well be set for a move back towards the 0.6935 area and July lows. As long as stay above the 0.7040 level then we could well still see a move back towards the 0.7160 area USDJPY – we may have peaked with last week’s push to 123.60, and could slip back all the way to 122.00. As long as we don’t slip below 121.80 then a move to 124.00 remains a possibility as well as a move through to the August highs at 125.30. Only a move below the 121.80 area would delay the prospect of this scenario unfolding. CMC Markets is an execution only service provider. 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