Though July was a good month for European stocks, it was nonetheless volatile, with the DAX in particular struggling to rally with any conviction, it was still the first positive month since March so hardly anything to shout about. The hope is that August may well be a little quieter, but given the amount of data due out this week the prospects of that aren’t expected to be particularly high. If a weakening Chinese economy, along with fragile stock markets aren’t enough of a worry, with this morning’s weak manufacturing PMI, coming in at 47.8, reinforcing that weakness, there is the on/off prospect of a potential US rate rise weighing on investors’ minds, with expectations shifting about what the Fed might do with every single passing data point. A sharply revised higher GDP print for the US economy for the current year saw expectations shift in the middle of last week towards the higher prospect of a potential move in September, until Friday’s disappointing employment cost index data promptly saw the air hiss out of that expectation. As we embark on a new month, at a time when trading volumes are traditionally low we have the prospect of the Athens stock market re-opening after a five week hiatus, with all the volatility and losses that will bring, along with a host of UK, European and US data, all guaranteed to shift the sands of economic expectations about central bank policy in the respective economic jurisdictions. While it would be easy to suggest that today’s reopening of the Greek stock market is a key step on the road to some form of normalisation, it is likely to be anything but. Aside from the fact that we could well see some big losses, there is the small matter that not only are the internal politics in Greece likely to remain difficult it is also likely to be extremely problematic to reconcile the divergent positions of the IMF and Germany on debt relief, particularly given the proximity of the next debt deadline on the 20th August. While the largest event risk comes at the end of the week with UK and US data dominating events, starting with super Thursday when the Bank of England starts it’s a new era with the simultaneous announcement of the rate decision, policy minutes and the quarterly inflation report at the same time, with a press conference with Governor Carney 45 minutes later, which could well move sterling as much as Draghi’s sometimes move the euro. We follow that on Friday with the latest US employment report which will no doubt the most important report since, well, the last one, given last weeks Fed statement that saw the word “some” added to the language and in front of “further improvement” with respect to the US labour market. For today the focus will be on the latest July manufacturing PMI from Italy, Spain, Germany, France, UK and the US. Expectations are for Spain to continue to outperform with a reading of 54.2, with Italy at 54.6, while Germany is expected to stay worryingly soft at 51.5. The perennial underachiever France is once again expected to struggle coming in at 49.6, as the major economies in Europe continue to diverge worryingly. In the UK the manufacturing sector has shown some worrying weakness in recent months, with some blaming the strength of the pound, particularly against the euro, and July is not expected to be any different with a manufacturing PMI reading of 51.6, a slight improvement from June’s 51.4, but well down from the levels seen this time last year, when the sector was returning numbers of 57.5. Focus then turns to the US with a raft of economic announcements including the latest personal income and spending data for June, as well as a raft of revisions to previous months. This is important in the context of the spending patterns for US consumers, and their propensity to go out and spend money in the shopping malls of America. Apart from a solid gain in May, personal spending for most of this year has been worryingly weak as shown by the retail sales and core durable goods data. June is expected to show a rise of 0.2%, down from 0.9% in May, but the revisions could well also be important, in both income and spending. We also get the latest core PCE data, which is the Federal Reserve’s preferred inflation measuring metric. This is expected to remain steady at 1.2% year on year. ISM manufacturing for July is expected to remain steady at 53.5, despite a positive Chicago PMI on Friday. EURUSD – the euro continues to be range bound an upper boundary just above 1.1100 and support down near 1.0800. A move through 1.1030 is needed to retarget last week’s high while a move below 1.0800 could well signal a move towards 1.0600. GBPUSD – the 1.5680 level remains a key resistance on the upside after another failed attempt last week. Support remains down at 1.5550 trend line support from the 1.4565 lows, as well as the 200 day MA at 1.5410. A move above 1.5700 has the potential to retarget the 1.5820 level. EURGBP – despite last week’s rally to the 0.7120 area the euro remains under pressure, but as long as we stay above the 0.6980 level we could get a rebound. A move below the 0.6980 level argues for further losses towards the 0.6930 lows. This remains the probable outcome unless we can get back above the 0.7040 level. USDJPY – another run at the 124.50 level saw the US dollar run out of steam last week before slipping back. This remains the key resistance level on the upside, with a through here retargeting the 125.85 highs. Support currently comes in at 123.00 for now, while below that we could see a move towards 122.50. 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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