It seems that the ever rising US dollar is slowly chipping away at investor confidence in equity markets if yesterday’s stock market slide is anything to go by. US markets in particular felt the full force of yesterday’s declines with both the Dow and S&P500 giving up their gains for this year as markets continued to price in the possibility of a Fed rate rise in the next few months, while commodities also got crushed with oil prices also sliding back. This slide in oil prices saw the resource heavy FTSE100 also get a bit of a kicking, dashing the hopes of those who were looking for a move through 7,000 less than a week ago. While it would be tempting to think we may have seen some short term peaks for US and UK markets, this year so far has been full of days where a move lower has been just as quickly reversed, but it does highlight a significant truth that even though equity markets are at or near record highs, sentiment remains very fragile. Given the heavy falls we saw yesterday it wouldn’t be too much of a surprise to see a bit of rebound today, with a slightly higher open expected this morning, but if the euro were to continue its precipitous slide of the last few days lower then it wouldn’t surprise too much to see equities follow suit. Concerns about the events between Greece and Europe, a slowdown in China, the effect of negative yields on the still fragile European financial sector, and a US rate rise makes for a volatile cocktail for investors to digest. The release of €555m to Greece from the Greek bank rescue fund may have alleviated some short term funding pressures for the Greek government, but it still remains some way short of meeting its obligations for the remainder of the month, making it likely that government officials could look to raid their social security funds for the extra cash. This morning’s Chinese economic data has reinforced concerns about a slower rate of growth for 2015 with February industrial production dropping from 7.9% in January to 6.8% in February, sharply below expectations of 7.7%. Retail sales also continued their recent downward trajectory declining from 11.9% in January to 10.7% in February, and the slowest rate since 2004 as Chinese consumers continued to reduce their outgoings. In the UK the latest industrial and manufacturing production numbers for January are expected to improve by 0.2%, both improvements on December’s numbers, in the process nudging up the year on year growth rate to 1.3% and 2.6% respectively. EURUSD – the euro slid through 1.0800 like a hot knife through butter and looks set for further losses towards 1.0500. To stabilise we would need to see a move beyond 1.0980 initially and then the resistance at the 1.1250 area. Only a move back through 1.1270 re-targets the 1.1450 area and last week’s high. GBPUSD – for three days in succession the pound has held above 1.5020 with support also at 1.4950, the lows this year. To stabilise we would need to see a rebound back through the 1.5130/40 level, and then behind that at the 1.5350 level. EURGBP – we still appear to be heading towards the 0.7000 level and while below the 0.7230 area this prospect looks increasingly likely. To stabilise we need to get back through the 0.7240 area, which would then argue for a move back towards the highs last week at 0.7300. USDJPY – a marginal new multi-year high at 122.05 yesterday saw the US dollar slide back again. The failure to push on through 122.00 only delays the prospect of a move towards the 2007 highs at 124.20. We need to hold above 119.80 for this scenario to unfold. 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.