Another crushing day for European markets yesterday on the back of erratic trading in Asian markets continues to keep investors on edge, while crude oil prices endured another torrid session as US prices hit new six year lows, falling on the back of another rise in inventories, against an expectation that they would fall. This sell-off on oil prices continues to prompt speculation of an intermediate base but given current sentiment this is turning out to be akin to trying to catch a falling knife, a bit like trying to call the base on European and Asia stock markets right now. While US markets managed to stage a brief rally on an unexpectedly dovish set of Federal Reserve meeting minutes, even this wasn’t enough to shake off the overarching sense of gloom, about events unfolding across the global economy, turning over to finish lower into the close. In the past few weeks there had been an overly growing sense that last night’s minutes could well point to an FOMC fairly keen to start preparing the ground for a move on rates as soon as next month, particularly given the particular focus on the improvement in the US labour market. As is often the case though the devil is in the detail and the removal of the paragraph about the stabilisation in oil prices merited more attention than most people in the market gave it, at the end of July. The Federal Reserve has a dual mandate, and inflation is the second pillar of that mandate and last night’s minutes pointed to a Fed that did have concerns about the low rate of inflation, as well as the strength of the US dollar and events in China, and that was even before last week’s Chinese devaluation, so their concerns could well be more pronounced now. The minutes did leave the door open for a move in rates though, saying that conditions for a rate rise were approaching, without being specific about timings. Ultimately any decision about September remains no clearer cut than it was at the beginning of this week, but given current conditions the odds would suggest that the Fed would be unwise to even consider raising rates next month. This week’s Empire manufacturing survey would have been an additional cause of concern after it hit its lowest levels since 2009, and today we could well find out whether it was a one off or symptomatic of a wider problem with the release of the latest Philadelphia Fed manufacturing survey for August. Expectations are for an improvement to 7 from July’s 5.7, but we expected similar from the Empire survey. Given yesterday’s minutes we could get a sense of the mood of another Fed centrist when John Williams of the San Francisco Fed gives a speech early this morning as we now look ahead to next week’s central bank symposium at Jackson Hole Wyoming, where the subject is about monetary policy and inflation dynamic, somewhat topical methinks. In the UK we get a snapshot of how the consumer is feeling about life given the somewhat indifferent weather in July with the latest retail sales numbers. June disappointed with a decline of 0.2%, but the beginning of July gave us some really nice weather and as such we could get a solid rebound of 0.4%. Given this week’s jump in core CPI another strong number here could be the catalyst to push the pound up towards $1.5800. EURUSD – support at the 1.1020 level held yesterday prompting a rebound back through the 1.1100 area, which increases the prospect of a move back towards the 1.1220 highs. Only a move below the 1.1020 area argues for a move towards the 1.0950 area, and possibly 1.0860. GBPUSD – we’re not seeing much of a dip at the moment which continues to validate the possibility of a move towards 1.5820. Only a move below the 1.5600 area delays this prospect and argues for a move back towards 1.5530. EURGBP – yesterday’s rebound needs to remain below the 0.7120 level to keep the prospect of a move lower through the 0.7000 level towards of the lows seen earlier this month at 0.6950. Above the 0.7120 argues for a move towards 0.7180 trend line from the May highs. USDJPY – the bias remains for more range trading with resistance above the 125.00 level, which while we remain below means we remain vulnerable to a drift lower, with support at the 123.75 area, and then 123.00. Only above 125.90 argues for a move towards 127.20. 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. 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.