US markets shrugged off weekend warnings from the Bank for International Settlements that stock markets were and running well ahead of economic fundamentals to post new all-time highs as investors continued to bet on the Goldilocks scenario of an accommodative central bank and data that remains at best, merely lukewarm. Having seen some good gains yesterday we can expect to see a little bit of a pause today with Europe’s markets expected to open slightly mixed. The problems facing the ECB and the euro area economy were once again laid bare yesterday for all to see with Spain posting its best manufacturing performance for seven years last month, while France’s manufacturing sector remained rooted at the bottom of the pile, posting an even worse performance than Greece. This improvement in Spain should be reflected in the unemployment data released this morning which is expected to show a fall of 150k for June, as the tourist season hits full steam and the growth in manufacturing jobs over the past month. The pound has continued its relentless progress higher as we head in the third quarter of 2014, buoyed by expectations of a rate rise later this year, and a continued improvement in economic data. Yesterday’s better than expected manufacturing PMI for June has raised expectations of a much better Q2 growth number. In recent months we've heard all sorts of dire warnings about the potential damage a higher pound could do to UK exports, but thus far these have not been realised, with new export orders rising at their best levels in five months, with orders coming in from markets in Asia, the Middle East and Europe. Employment also rose for the fourteenth month in succession, with small businesses starting to hire more aggressively. Today’s construction PMI data for June will, it is hoped, also feed into the more positive narrative as we head into the summer, though unlike manufacturing we do seem to be seeing a little bit of a slowdown here after seeing activity peaking in January at 64.6, we have slowly slipped back and could well slip below 60, with a reading of 59.7 expected, which would be an 8 month low. After yesterday’s rather lacklustre economic data from the US served to propel US markets to fresh new all-time highs, largely as result I suspect due to the muted inflation component in the ISM reinforced the Fed’s low rates narrative, attention now turns to the latest labour market data for June. The latest ADP employment report can sometimes offer clues as to the direction of the official payrolls report later in the week. This hasn’t been true in recent months though, while yesterday’s ISM employment component didn’t offer much in the way of clues in regard to tomorrow's payrolls report either. Expectations are for jobs growth of 205k, up from the 179k seen in May. EURUSD – the euro looks set for another push higher after breaking back through and closing above the 1.3675 area and the 200 day MA. The next resistance sits at 1.3740, the 100 day MA and behind that in the 1.3780 area. Support also comes in at 1.3560, while below that we also have key trend support from the 2012 lows at 1.2045, which now comes in just above 1.3465. GBPUSD – this week's break out and move above 1.7000 argues for further gains towards 1.7330, with initial resistance at 1.7180. 1.7330 is the 50% retracement of the decline from the 2007 highs at 2.1160 and the lows at 1.3500 in 2009. Only a move below 1.6910 support delays the scenario above. A drop below 1.6910 sees major support all the way back at the 100 day MA at 1.6725. EURGBP – the attempts to push through 0.8035 failed last week, and we could well see a drift back towards the recent lows at 0.7960. We need to push through 0.8035 to target 0.8085.The pressure remains on the downside while we remain below trend line resistance from the March highs sitting just below the 0.8110 level, with a longer term target at 0.7880. USDJPY – last week’s move below the 200 day MA support at 101.60 opens up the risk for further declines towards the 101.00 area initially. Resistance now sits at 101.80 as well as the range highs just below the 103.00 area and the June high at 102.75. 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.