The fourth successive daily close in succession would appear to suggest that US markets have lost a little bit of their mojo after last week’s surge to record highs. It’s not too difficult to understand why when you look at the conflicting signals come from various Fed officials who seem singularly unable to come out with a coherent and consistent message with respect to the timing of any form of tapering. It probably doesn’t help that some market participants are continuing to overanalyse what some Fed officials are saying, but that’s the problem with this type of forward guidance, everyone has their own interpretation of it, which inevitably leads to confusion, or the central bank becoming a hostage to fortune. US economic data continues to remain patchy with yesterday’s consumer confidence numbers slipping back slightly, not surprising really when you look at the recent retail sales numbers, which continue to come in well short of what the confidence numbers suggest they should be. Nevertheless this continued Fed indecision, along with rising concern about the looming debt ceiling debate and potential US government shutdown is also feeding into European markets, and is likely to see a lower European open this morning despite a fairly positive day yesterday. Part of the main reason for yesterday’s positive European session was an improvement in the latest German IFO numbers, even though they did slightly fall short of expectations, they were better than the month before. Today’s latest German consumer confidence numbers could well give a further boost to European investors if, as expected, they come in at their highest levels since August 2007, at 7.1. A good number here would suggest that German consumers continue to remain insulated from the problems elsewhere in Europe. Confidence is certainly going to be a key commodity when it comes to the economy in Europe and it does appear to be heading in the right direction. They key question is whether it will be enough. French business confidence is also expected to show some improvement today, as is Italian consumer confidence. Unfortunately, while it does appear to be heading in the right direction, outside of Germany it still remains in short supply, despite Spanish PM Rajoy raising the Spanish economy’s 2014 growth target. The French government are also set to try and pass their latest 2014 budget, and try to keep it within the agreed EU guidelines. Draghi’s comments earlier this week that he remains ready to reopen the liquidity taps testify to that, and the fragile nature of this weak European recovery. The latest US data due out today won’t add too much to the overall debate about tapering with the latest August durable goods numbers, as well as new home sales data, expected to improve a little, but by not a sufficient amount to suggest an October taper is likely. Durable goods are expected to come in flat, an improvement on a 7% decline on the previous month, while new home sales are expected to rise 6.4%, up from a 13% decline previously EURUSD – the euro continues to slip back pushing below 1.3480, but as long as we stay above the 1.3420 area then a retest of last week’s high remains possible, and then on to 1.3710. Only below the 1.3420 area, argues for a retest of the lows last week at 1.3320. GBPUSD – yesterday we saw a move below 1.5980 but it proved short lived and the pound subsequently recovered. The risk is that a sustained break below 1.5980 could suggest a move towards the lows last week at 1.5880 and the medium up trend support now comes in at 1.5745 from the 1.4815 lows. EURGBP – while below the 0.8470 area the risk remains towards the downside and a test of the 0.8280 area, the 50% retracement of the 0.7755/0.8815 up move. A move back below the 0.8390 area would suggest that this move could be about to unfold. To stabilise we need to see a move above the 0.8500 area and the 200 day MA. USDJPY – while US treasury yields remain soft, the US dollar will struggle to rally strongly. While below the 100.00 level the risk remains for a retest of the trend line support at 97.70 from the June lows at 93.85, as well as the daily Ichimoku cloud support last week. Only a move below this trend line suggests further losses towards the 94.00 area. We need to see a move above the highs two weeks ago at 100.60 to retarget the 103.70 area. 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.