US markets continued to struggle near their recent highs yesterday with the S&P500 struggling to move much beyond 2,010, while finding support at 1,990. Given what is happening in overseas markets, like Europe, the UK and China as well as the rising US dollar, the worry is that a combination of an appreciating US dollar and a global economy that could well be starting to slow down, could well start to act as a brake on the ability of US markets to push up to new highs. Yesterday we saw a mixed session for Europe’s markets with the German DAX managing to finish in positive territory, while the FTSE100 closed lower, though well off its lowest levels of the day. As for today we look set for a lower European open as investors start to price in rising political, as well as economic uncertainty. Events in Ukraine continue to give investors pause, with the announcement of the details of the latest round of EU sanctions towards Russia, which could well have the effect of precipitating an unwelcome counter response, in the event they are implemented. In the UK we’ve seen a large sell-off in the pound which has continued overnight, while a number of UK companies with interests in Scotland finished the day nursing losses, over concerns about the possibility of a “Yes” vote in next week’s independence referendum. This is likely to be a familiar theme over the coming days as companies and investors look at contingency plans in the event we do get a “Yes” vote. Any increase in political or economic uncertainty is always likely to make investors nervous, and a Scottish “Yes” vote would create this in spades, which suggests we will continue to see further market weakness, due to the numerous unknowns, if the polls continue to move in the “Yes” camps favour. If there is a bright side to all of this then maybe a week or so of roller-coaster like volatility might be a good thing if it concentrates minds on both sides of the political divide, of the potentially enormous economic and political consequences and costs that a “Yes” vote might bring. With the final vote still 10 days away it is quite likely we can expect to see more volatility as the polls swing back and forth, and hope some form of sense prevails. With all the sound and fury surrounding the Scottish referendum question we also have the small matter of some economic data to be concerned about, with the release of the latest industrial and manufacturing production data for July, with a positive number here boding well for the beginning of Q3 and the continued expansion of the UK economy. The PMI’s for July were particularly strong, but we know from experience but that strong PMI’s don’t always translate across to positive reports from the ONS. Nevertheless expectations are for an increase of 0.2% and 0.3% respectively. The July trade numbers are expected to show a -£9bn trade deficit. The latest August retail sales numbers from the BRC appear to point a UK consumer spending money in fits and starts as we head into the third quarter of 2014. Coming off the back of two monthly declines this month’s numbers came in at 1.3%, a much better number than expected. Later this afternoon we have the latest GDP estimate for August from the NIESR which is expected to come remain at the 0.6% we saw in July’s reading. EURUSD – the euro has broken below the 1.2920 area in a sign that we could well see further weakness towards the 1.2790 level in the coming days. To stabilise it needs to overcome resistance at the 1.3020 area to suggest a rebound towards 1.3110. The 1.2785 level is the 61.8% retracement of the up move from 1.2045 to 1.3995. GBPUSD – the pound has continued its declines as it looks to push closer to the 1.6000 level which is not only the 200 week MA but also the 50% pullback from the 1.4820/1.7190 up move. The pound needs to recover back through 1.6280 to eliminate this downside risk, and argue for a return to 1.6520. EURGBP – we got the test of the 0.8040 level, but the failure to break above it keeps the risk of a pull back towards the 0.7970 level a real possibility. A break above the 0.8040 level could well open up a move towards 0 8085 initially but also a move towards 0.8150. A move below 0.7970 argues for a move towards 0.7920. USDJPY – yesterday’s break above the 105.50/60 area is hugely significant and could well propel the US dollar towards 110.00. This scenario could only be undermined by a move back below 105.20. 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.