If yesterday’s European market price action had been a Shakespeare play it would have been “Much ado about Nothing” as traders spent most of the day sitting on their hands, choosing to ignore the negative headlines out of Ukraine, instead choosing to focus on the unlikely prospect of further central bank action later this week, as economic data continued to disappoint. Yesterday’s weak manufacturing PMI data from China, as well as the slowdowns exhibited in the latest manufacturing data from Spain, France, Italy and Germany has once again shifted the focus on to the expectation of more monetary stimulus, as attention once again shifts towards this week’s European Central Bank rate meeting. It appears that investors are holding onto the outside prospect that the ECB might announce further steps to help boost growth and demand later this week, particularly after ECB President Mario Draghi’s comments at Jackson Hole late last month, and this appears to be outweighing any concerns about the war between Ukraine and Russia, thus limiting the downside for now. We’ve even had the French Prime Minister Manuel Valls calling for the ECB to take additional further steps to push the euro lower, in what has become an almost weekly rinse and repeat French refrain, as if a lower euro will somehow turn the French economy around. While pressure grows on the ECB to do more we had the German finance minister Wolfgang Schaeuble pushing back and reiterating his comments from last week that the current crisis must be resolved with existing tools, and that countries who had implemented reforms were “doing much better than all the others in Europe”. Today’s focus is set to be on the latest Spanish unemployment numbers which are expected to show an increase of 21.8k in August, as the end of the summer season approaches. In the UK there is some concern that the 2014 growth story may have plateaued, after manufacturing PMI came in at its lowest levels for over a year at 52.5, well below expectations of 55.1. with this week’s Bank of England meeting looming large, there is a chance that the economic data we’ve seen so far this year is likely to be as good as it gets, with this week’s economic data potentially masking the beginning of a lower level of economic activity in the coming months. A similarly disappointing August construction PMI number today is likely to pull the sting from the argument for higher rates in the short term, particularly after yesterday’s poor manufacturing numbers. Expectations are for a slowdown from July’s 62.4 to 61.5. That still remains a good number, but given how small a percentage construction is of UK GDP, it doesn’t carry anywhere near as much weight as tomorrow’s services number will. That being said we’ve not had a single month come in below 60 this year so far, which shows how buoyant this particular sector has been thus far. US markets return from their long weekend break with the latest ISM manufacturing number for August, and given last week’s blow out Chicago PMI number there is a chance we could get a similarly positive ISM number today. Expectations don’t appear to be factoring this in with a slight slowdown expected from 57.1 to 56.8. EURUSD – the risk for a move towards 1.3020 level remains after we broke below the 1.3150 level late last week on Friday, negating the bullish daily candle which turned out to be a bull trap. The euro needs to push back through the 1.3230 level and fill the gap from 22nd August. The 1.3020 area remains the ultimate target being a 50% retracement of the move from the 2012 lows at 1.2042 to the 1.3993 highs earlier this year. GBPUSD – the pound managed to avoid its eighth weekly decline in a row on Friday and has managed to push up through 1.6610/15, but has run into resistance at 1.6645. A failure to break below last week's low at 1.6539 could well see a sharp short squeeze towards the 200 day MA at 1.6695. A move below 1.6520 targets a move towards 1.6460 and the lows in March. EURGBP - the euro appears to be holding above the July lows at 0.7875 for now and this remains the main obstacle to a move towards the 0.7785 level, and July 2012 lows. We could still see a move back towards the 0.8000 level in the short term, but overall the trend remains lower, while below 0.8000 trend line resistance from the August highs. USDJPY - the US dollar appears to be slowly creeping higher towards 105. While above the 103.50 area the risk remains for a move towards 105.50. This remains a huge level given it was the recent high from the end of last year, as well as the 61.8% Fibonacci retracement of the decline from the 2007 highs at 124.13 to the lows 75.58 in 2011. 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.