The records continued to tumble yesterday with new record closes on the Dow and S&P500 as well as new all-time highs on both the FTSE100 and the German DAX, despite economic data that could best be described as patchy. There were some bright spots but there were also some causes for concern, on both sides of the Atlantic, but with the Chinese central bank the latest in a very long line of policymakers to ease policy further money continues to flow into the line of least resistance, that being equity markets, which should translate into a positive open for European markets this morning. The Reserve Bank of Australia had been widely expected to follow the Chinese lead this morning but kept interest rates on hold against market expectations, but having only just cut rates last month the central bank probably thought it best to assess the effects of last month’s action, as well as seeing whether China’s attempts to boost its economy prompted a trickle-down effect to the Australian economy as well. Yesterday’s European data did show some evidence of a potential turnaround in some areas of the various economies in Europe with Ireland showing its strongest performance since 1999, in the manufacturing sector, but there were also some worrying areas of weakness in France and Greece in particular, where both economies showed sharp contractions in their manufacturing sectors. Greece in particular continues to be a cause for concern with contradictory noises coming out of Athens with respect to the government’s willingness to abide by the agreement that appeared to be sealed last week. There still appears to be significant pushback from politicians in Athens about abiding by the terms of the current bailout agreement. The Greek government has yet to deal with its problem of a lack of liquidity, as it seeks to play off its creditors against each other, as it looks to find a way to satisfy its obligations to the IMF in preference to the EU, with some speculation that it may tap its pension reserves. On the economic data front the Spanish economy showed another positive reading in its manufacturing sector yesterday, but high levels of unemployment continue to be a worry and the recent improvement in the last couple of months in the unemployment numbers came unstuck last month with an increase of 78K, and it is expected to see another small increase in the numbers for February of 10k. In the UK the manufacturing sector showed a much better than expected improvement in its February numbers coming in at 54.1, driven by an increase in new orders from domestic clients, though exports continued to disappoint. The February data also signalled an increase in UK manufacturing employment for the twenty-second successive month. Today’s February construction PMI is expected to be similarly positive, driven predominantly by the housebuilding sector with a reading of 59, slightly down from January’s 59.1, but will still be the 22nd consecutive month of expansion in a booming sector of the UK economy. EURUSD – so far rebounds have been confined to the 1.1250 area which was originally the range lows for most of February. A move through 1.1270 should re-target the 1.1450 area and last week’s high. The next support lies at the 1.1090 area and the January lows. A break here targets 1.0800. GBPUSD – the pound continues to drift lower and could well test the 1.5280 area in the coming days if we break below the 1.5350 area. Last week’s key day reversal remains a concern but only a move below 1.5280 argues for a move back to 1.5000. Resistance sits at 1.5480 and behind that at 1.5570. EURGBP – yesterday’s rebound stalled at the 0.7300 level and this needs to break to target a move higher back towards 0.7460. The rebound off 0.7240 looks like a key day reversal but needs confirmation on a move through 0.7320. The 0.7460 level remains a key resistance on the topside and while we could get a rebound, the risk remains for further losses. If we push below 0.7240 then we could well see further losses towards 0.7000. USDJPY – the US dollar has managed to regain a foothold above 120.00, but needs to get above 120.60 to suggest a retest of the 121.85 highs from last year. Back below 119.70 argues for a return towards 118.60. CMC Markets is an execution only service 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.