Yesterday’s slide in US equity markets was in part triggered by concerns that despite a sharp slide in oil prices in the last few weeks US consumers remain reluctant to loosen the purse strings as early indications suggested that Black Friday sales numbers were markedly down on the year before. For an economy that is supposed to be showing some decent signs of recovery this does seem a little concerning, though monthly retail sales numbers have been consistently weak throughout most of 2014, despite above average monthly jobs gains throughout the year. When these concerns were combined with some weak manufacturing PMI numbers from China, Germany and France, as well as some incredible volatility in commodity markets, we saw equity markets in Europe slide back, while oil, gold and copper prices rebounded strongly. It would appear that some investors decided in the face of a lot of this uncertainty to book some profits on some of the gains that we’ve seen since the lows in October, ahead of this week’s host of central bank policy meetings, and key economic data. This weakness looks set to stabilise this morning in European markets, after a sharp rebound in the oil price from 5 year lows as investors start to weigh up the prospects for further easing from both the European Central Bank and the People Bank of China, in the coming weeks, as the deflationary effect of the recent falls in oil prices filter down into inflation expectations. Market participants now have to weigh up the positive effects of the recent slide in oil prices, which is a fiscal stimulus all by itself as companies input costs decline, a fact confirmed by yesterday’s sharp drop in the prices paid component of the November manufacturing ISM to 44.5, while consumers find they suddenly have more disposable income as a result of falling energy and petrol prices. This should be a positive for household budgets, particularly in the lead up to Christmas, but there is always an offset and this could well manifest itself in terms of the negative effects it could have on oil producers, their margins, and their ability to create future jobs if the oil price continues to fall. Today’s economic data is fairly light on the ground with the latest Spanish unemployment data and UK construction PMI data. Yesterday we saw Spain post another strong manufacturing PMI of 54.7, the highest level since June 2007, with strong growth in new orders and output, while employment also improved, yet doubts remain about how resilient this recovery is. The Spanish government once again announced plans to raid its pension reserve fund this time to the tune of €8.5bn in order to pay public sector Christmas bonuses as tax revenues continue to struggle. Today’s latest unemployment numbers are expected to show another rise, though the number is not expected to be as high as the sharp rise seen in October of 79.2k, with an expectation of 21.3k. In the UK the latest construction PMI for November is expected to remain above 60 for the 13th month in a row with a reading of 61.1, down slightly from October’s 61.4. EURUSD – the failure last week to move above trend line resistance at 1.2530 from the October highs at 1.2887 keeps the focus on the downside, and the recent lows at 1.2355. While above these lows the possibility remains for a move towards 1.2600. We need to move below 1.2350 level to target a move towards the 1.2040 level. GBPUSD – we’ve so far managed to remain above the 1.5590 area once again rebounding off support. Last month’s lows remain a key support, a break of which could well push down towards 1.5210, which is trend line support from the January 2009 lows at 1.3500. Yesterday’s rebound back through 1.5700 has stabilised and could well take us back towards last week’s high at 1.5830 on the way to a test of 1.5900. EURGBP – while the support at the 0.7900 level holds the risk remains for a move back towards the 200 day MA at 0.8045 as well as trend line resistance from the September highs at 0.8030. For now we seem to be range trading but the risk remains for a fresh move lower, back towards the 0.7870 level. USDJPY – despite a marginal new high at 119.03 we have thus far been unable to gain a foothold above 119.00, and as such remain susceptible to a pullback. The 120 target does remain achievable but the move higher is becoming overextended, while behind 120 we also have trend line resistance at 122.90 from the April 1990 highs at 160.30. The risk of a pullback remains but while support at 117.30 remains, buy on dips remains the strategy here. strong>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. 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