It would seem that all the fears about the effects of a slowdown in emerging markets and a soft patch in recent US data have dissipated for now, and all it took was a decent US weekly jobless claims number and some soothing words from ECB President Mario Draghi, when he insisted that Europe did not have a deflation problem, and hinted at the prospect of possible action at next month’s meeting when more data would be available. Well that’s alright then, if only all our problems were so easily solved, such is the schizophrenic nature of markets these days investors appear to have convinced themselves that this afternoon’s latest US employment report will see a significant readjustment of the December payrolls miss and a much healthier January figure. In reality not much has changed from the uncertainty of earlier this week, and markets would be well advised to remember that sentiment can turn on a dime, with concerns about China and emerging market growth still present. We got a reminder of that this morning with another weak Chinese HSBC services PMI number. The sector slowed to 50.7, still in expansion territory, but the lowest level in two and a half years and is likely to remind markets that China’s problems haven’t gone away. The lack of reaction thus far could well be due to the belief that the recent Lunar New Year holiday break could well be a contributory factor the recent slowdown. In any case judging by yesterday’s sharp rebound expectations may be running ahead of themselves with respect to an upward jobs revision for December today, though we could get an above consensus January print. Looking at recent years as a guide this has only happened once though, in 2012, when we got a 311k print. In some quarters expectations today are as high as 270k, which given the recent weather seems rather optimistic, and in part this has helped provide fuel for the current rebound, with European markets set to open slightly higher this morning. The US unemployment rate is expected to remain at 6.7%, though there is a chance we could see it drop down to 6.5% particularly if more people drop out of the figures, so the participation rate will once again be the focus of market attention. Before that we have some UK data in the form of industrial and manufacturing production data for December which are expected to come in fairly strong given the positive PMI’s seen in that month. Growth of 0.6% on both measures is expected a significant improvement on November’s 0%. Strong numbers here could well see expectations about UK Q4 GDP growth revised upwards from the initial 0.7% number we saw last week. In Europe we also saw some rather soft German factory orders data yesterday with a 0.5% decline for December and this could well bleed through into a similarly disappointing industrial production number today. Expectations are for a rise of 0.5%, down from 1.9% in November. EURUSD – yesterday’s rally brought is back above the 1.3600 level after holding above the support at the 1.3475/80 area. That being said the onus still remains towards the downside and a move towards 1.3300, with fairly strong resistance now sitting around the 1.3700 area. Last month’s bearish engulfing candle on the monthly charts still remains valid with the bias still towards the downside, and a subsequent retest of the 1.3000 level. Long term trend line resistance remains at 1.3855 from the all-time highs at 1.6040 and ultimately this remains the key obstacle to a move through 1.4000. GBPUSD – the 1.6250 area and 100 day MA continues to support for now and remains the last obstacle to a drop on the 1.6000 area. Resistance for the last three days remains at 1.6350, then 1.6420 and the 50 day MA, but in order to stabilise we need to get back above 1.6510 argue for a retest of last month’s high. EURGBP – yesterday’s move through 0.8330 level fizzled out at 0.8350 just shy of the 0.8375 level and trend line resistance from last August highs. On the downside we have support at 0.8260, and below that at our previous lows at the 0.8165 level. USDJPY – yesterday’s move above the 101.80 level shifts the focus back towards the 103.00 area. The 101.80 level should now act as support for this move to unfold. A move back below 101.80 retargets the recent lows at 100.80, and even potentially a move towards the 100.00 level and 200 day MA. 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.