Even though we saw European markets fall sharply yesterday, stock markets have remained broadly within the ranges they’ve been in for the last few weeks, and that’s broadly been true of US markets as well, even if we have seen marginal new all-time highs on the S&P500 and the FTSE100 this week. Weaker economic data appears to be a rather common theme, weak PMI’s last week from France and Germany, disappointing Chinese and Japanese data, and a weaker than expected UK GDP number yesterday. The fact is, while the data isn’t bad, it isn’t great either, casting doubt on the recent rebound in economic activity in Europe and the UK. The weakness in UK GDP was unexpected at 0.3%, with weakness across construction and manufacturing. This could be down to any number of factors but does seem at odds with recent PMI data, which might suggest some upward revisions next month. As such shares here in Europe continue to look a little tired ahead of the culmination of today’s latest Federal Reserve rate meeting, and without a clear catalyst for the next move the moves we are getting have tended to be quite sharp from one day to the next. US markets on the other hand have started to look a little perkier largely as a result of increasing evidence of some weakness in the US economy, which in turn has raised expectations that any move on rates by the Fed could well be deferred, and this in turn has weakened the US dollar Unfortunately for European markets a weaker US dollar means a stronger euro and this, along with the perennial problem child of Greece, appears to be acting as a cap on European markets for the moment, though we should see a positive open this morning. At the beginning of this year it was generally expected that we were likely to see the US central bank start to act on a normalisation policy as soon as June, as the US economy continued its progress from 2014. As 2015 has progressed doubts have started to creep in about the timing of such a move, and these were brought to the fore by the disappointing March payrolls number earlier this month, which appears to have crystallised concerns about the recent weakness of other data points. There still appears to be a belief that the current weakness is transitory, brought about by the cold weather, the port strikes on the West Coast and the lower oil price. Given that today’s April meeting has only seen one jobs report, and a poor report at that, since the last meeting in March, there isn’t likely to be any significant change in tone or language, but it is significant that in recent days some Fed officials have become more cautious in some of their language, regarding time frames for a move on rates, though they have been careful not to remove the June option from the table. Yesterday’s sharp drop in US consumer confidence for April was the latest in a line of poor economic numbers, and while in itself it’s not as important as the more reliable consumer sales data, it nonetheless speaks to a wider concern about a possible sustained slowdown spilling into Q2. Today’s US Q1 GDP numbers are likely to show the first indication of how much of a slowdown we saw in Q1, with expectations of a sharp fall to 1% from 2.2% in Q4. While this is disappointing it won’t be unexpected, but a lower number would raise bigger concerns that it could get revised even lower. This is because US GDP does have a habit of getting revised lower, and any further weakness could well raise additional concerns about how well the US economy is actually doing. EURUSD – having overcome 1.0900 the next resistance sits at 1.1050, the highs of the last 2 months. Trend line support from the 1.0520 lows now sits at the 1.0730 area, and this remains key in the context of the current rebound. A break through 1.1050 targets a move to 1.1220 initially and then 1.1500. GBPUSD – the pound continues to gain traction pushing above the 1.5175 level and 100 day MA, as we look to push on towards the 1.5500 level. Pullbacks are likely to find support at both the 100 day and the 50 day MA at the 1.5000 level as the bullish weekly reversal candle of 2 weeks ago continues to play out. EURGBP – currently sidelined in a sideways range between last week’s low at 0.7117 and resistance at 0.7200. To mitigate the downside pressure we would need to see move back through the 0.7235 area. USDJPY – despite a quick peak above 120.00 last week the US dollar continues to struggle. We need to retake the 120 level to retarget the 120.70 area and the highs at 122.00. While below 120.00 the bias remains for a return towards the March lows at 118.30. A move below 118.30 retargets the 116.50 level. CMC Markets is an execution only service 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. 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