The feel good factor from Friday’s US payrolls number soon lost its shine yesterday with the German DAX in particular enjoying a spectacular reversal of fortune, after initially opening significantly higher, as it played catch up after being closed on Friday. The German benchmark was soon brought down to earth with a bump when the most recent factory orders data for August showed a massive slide of 5.7%, the worst fall since 2009, though for some inexplicable reason the decline in the index didn’t really start to gain pace until the afternoon session. German officials shrugged off the data saying the time of school holidays had influenced the number, but the declines were broad based across the sector, and it is hard to escape the fact that events in Russia and Ukraine, a lack of demand in Europe, as well as a China slowdown must be having an effect, and with that in mind it is hard to imagine that today’s industrial production data will be any better. Expectations are for the August industrial production data to show a fall of 1.9%, but it could well be a much higher number than that, given yesterday’s number. Ordinarily, bad data such as this would invite speculation about further monetary stimulus, but if markets think this is a possibility they haven’t been paying attention for the past five years. We are talking about the ECB here and for all its talk it isn’t the Federal Reserve, and given last week’s announcement markets will have to make do with the measures announced in the last couple of months until the end of the year at least. Anything else is wishful thinking. In the UK recent data has also suggested that the UK economy is starting to feel a little chill from the slowdown in Europe, if recent manufacturing PMI data is any guide, and for that reason we could well see a similar slowdown in the manufacturing sector here. The latest manufacturing and industrial production data for August is expected to show a bit of a slowdown from the July numbers, with gains of 0.2% on both counts, down from 0.3% and 0.5% respectively. The latest GDP estimate from the NIESR is still expected to point to a fairly positive quarter with growth of 0.6% expected. US markets also ticked lower last night as US investors looked ahead to this week’s FOMC minutes as well as a raft of Fed speakers, between now and Friday, with the minutes not expected to offer up too much in the way of surprises though this week’s Fed speakers could well add some colour to their thinking on the next steps in policy after last week’s payroll numbers. Today’s speakers are Minneapolis Fed Kocherlakota and the New York Fed’s William Dudley who are both due to speak on monetary policy this evening, and though both are perceived as doves, any change of tone towards the hawkish side in the wake of last week’s payrolls numbers could well be instructive EURUSD – yesterday’s rebound in the euro could well see further gains despite last week’s low at 1.2500, after we almost saw a bullish reversal on the daily candles. Given the declines seen in the past few weeks some form of rebound is well overdue. We need to see the euro overcome resistance at 1.2785 to really suggest that a short term base is in, otherwise the risk is for a move towards 1.2400. GBPUSD – could last week’s move lower been a bear trap? Having posted a tweezer bottom at 1.5950 the resultant move back through 1.6020 might suggest just such a scenario. As long as we can sustain this move above 1.6020 we could well head back towards 1.6220, otherwise the risk remains for a move back towards 1.5950 on the way to 1.5720. EURGBP – the 0.7875 level continues to cap the topside for now, with a break targeting 0.7930, but the bias remains for a lower euro while below here. The support remains on the downside at 2012 lows at 0.7754 and last week’s lows at 0.7765. While we remain below 0.7875 the bias remains for euro weakness towards levels last seen in October 2008 at 0.7690. USDJPY – while 110.00 caps the key reversal day on Wednesday remains valid and as such we could well see further weakness on a break below 108.00, and argue for a test of the 106.20 area in the coming days. 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.