Fears about another European recession saw another negative day for Europe’s markets yesterday, after German industrial production for August followed the factory order data by sliding back sharply and at its fastest rate since 2009, as fears about the health of the German, and by definition the wider European economy grew as markets head into the end of the year and Q4. These concerns also translated across the Atlantic to US markets prompting the S&P500 to close at an eight week low, and the Russell 2000 to close at its lowest level in nearly a year. The latest growth forecasts from the IMF added to the gloom, though they weren’t actually telling anyone anything they didn’t already know, as the global growth forecasts for 2014 and 2015 were downgraded, following on from similar action from the OECD a month ago, largely driven by economic weakness in Russia, Europe and Brazil. The IMF went on to warn of a weak and uneven recovery with the UK and US outperforming overall, but even here there has been some evidence of some plateauing, as events elsewhere spill over into concerns about company earnings, and the potential for guidance downgrades as US earnings season gets underway. These concerns look set to see European markets open significantly lower this morning, as markets look to approach their lowest levels this year. US markets in particular are most vulnerable given that they have generally outperformed the wider market in the last 24 months. As concerns about a retreating Fed dovetail into concerns about a slowdown in China and Europe, investors are not unnaturally asking questions about company valuations, particularly where markets are at, or near, record highs. With QE set to end at the end of this month tonight’s FOMC minutes could well be instructive with respect to the Federal Reserve’s thinking on the trajectory of monetary policy in the coming months. We saw further dissent at the last Fed meeting with the Dallas Fed’s Richard Fisher joining Charles Plosser in dissenting on the tone of the Fed statement at the most recent policy meeting. Investors are likely to be focussed on the tone of the debate with respect to the language of the statement and in particular the words “a considerable time” with respect to the possibility of a rate hike. If there appears to be a general move towards removing this phrase then we could well see markets become much more skittish about the prospects of a hike in rates, sooner rather than later. Given that this meeting happened prior to last week’s payrolls numbers this seems unlikely, but it could well be up for discussion at the end of the month, when the Fed meets for the penultimate time this year. EURUSD – the 1.2570 level appears to be constraining the downside for now. We saw a mildly bullish candle on Monday and if we break through the 1.2670 area we could well squeeze higher towards 1.2785. Below 1.2570 argues for a retest of the 1.2500 level and then 1.2400. GBPUSD – could last week's move lower been a bear trap? Having posted a tweezer bottom at 1.5950 the resultant move back through 1.6020 might suggest just such a scenario. As long as we can sustain this move above 1.6020 we could well head back towards 1.6220, otherwise the risk remains for a move back towards 1.5950 on the way to 1.5720. EURGBP – the 0.7875 level continues to cap the topside for now, with a break targeting 0.7930, but the bias remains for a lower euro while below here. The support remains on the downside at 2012 lows at 0.7754 and last week's lows at 0.7765. While we remain below 0.7875 the bias remains for euro weakness towards levels last seen in October 2008 at 0.7690. USDJPY – while 110.00 caps the key reversal day on Wednesday remains valid and as such we could well see further weakness on a break below 108.00, and argue for a test of the 106.20 area in the coming days. 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.