Oil prices continued to rebound strongly yesterday as BP became the latest in a long line of major oil companies to pledge to cut back capex spending in the coming months, in a response to seven successive months of declines in the oil price. It would appear that these measures are helping to support and underpin prices and have helped spark a short covering rally which could well see a move back towards $65 a barrel. The rally in crude prices has also helped put a floor under energy stocks, in the process taking some of the recent downward pressure off US markets, which had been starting to look a little heavy. The recovery in energy stocks has also helped underpin the FTSE100 which has been somewhat of a serial underperformer over the past few months, struggling to gain traction anywhere near the 6,900, level as it looks to close in on its all-time highs at 6,950. Equity markets have also been helped somewhat by a lessening of tensions between the new Greek government and EU policymakers, though we can surely expect a few more bumps in the road along the way. Investors are continuing to put their faith in the prospective plan put forward by Greek finance minister Varoufakis of a debt swap linked to growth linked bonds. It remains far from clear that EU policymakers will embrace this plan, with Greek PM Alexis Tsipras due to meet EU Commission President Juncker today in Brussels. Germany appears to be content as well as resigned, to play a waiting game for now, and while the bailout program for Greece expires at the end of the month, the ECB would be unlikely to, as well as be very ill advised to cut off support to Greek banks, given that such an action would probably cause a market meltdown. As Winston Churchill once said “jaw-jaw is better than war-war”, and that appears to be the tack that markets are adopting for now, hence the rally seen in the past day or so, as realisation takes hold that the negotiations being undertaken could well take some time.. With that in mind European markets look set to open higher this morning with the focus on the latest services PMI data for January from Spain, Italy, France and Germany. The poor relations are once again expected to be the numbers from Italy and France with minor contractions expected of 49.5. Both Germany and Spain are expected to come in positive at 52.7 and 54.5 respectively. In the UK over the past couple of days we’ve seen the manufacturing and construction PMI both surprise to the upside, and a similarly positive number for services PMI would augur well for the beginning of Q1, as we head towards the main event for this year, the election on May 7th, which could well start to act as a drag in the lead up to the vote. Expectations are for a slight improvement from 55.8 to 56.6. The afternoon session brings us the latest US ADP employment report and this is sometimes seen as a good guide to the latest employment report, a couple of days later, though in reality it never is. Recent US economic data has suggested that the received wisdom of a possible US summer rate hike may not be as set in stone as first believed. The fact is some of the more recent data would appear to suggest that such a measure may well not come at all, so a weak number here, or in the non-manufacturing ISM could well cause expectations to get revised. ADP payrolls are expected to show a gain of 224k for January, down from 241k in December, while the non-manufacturing ISM is expected to slow slightly from 56.5 to 56.4. EURUSD – yesterday’s break above the 1.1460 level suggests the potential for further gains towards 1.1700, though we need to break above yesterday’s high at 1.1530 first. The key support remains down at the 1.1205 level but we also have interim support down near the 1.1420 level as well. GBPUSD – despite a brief dip below 1.5000 yesterday the failure to close below it continues to point to the risk of a short squeeze back to 1.5400, by way of resistance at 1.5225 and last week’s high. For a move towards 1.4810 to unfold we would need to see a close below the 1.5000 level. EURGBP – yesterday’s rally to resistance at the 0.7590 level has managed to hold so far, with a break higher targeting a move towards 0.7690. trend line support from the lows at 0.7400 currently comes in at the 0.7485 level, and while this holds the medium term uptrend remains intact. Only a move below 0.7400 suggests a move towards 0.7255, which had originally been the peaks seen in 2003. USDJPY – continues to trade in a broad range between 117.00 and 119.00, despite a brief dip to 116.55 earlier this week, with the odds suggesting we could see a retest of the recent lows. The key support remains just above the 115.60 level as well as 116.10, which is also potential neckline support for a forming head and shoulders pattern. A break of 115.60 could well see a sharp fall towards 110.00. CMC Markets is an execution only service provider. 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