Though the S&P500 may have made a marginal new all-time high on Friday it finished the day firmly in the red as traders erred on the side of caution ahead of the weekend, with one eye on events on the Russian/Ukrainian border. Having been caught out a few weeks ago over a weekend it would appear that discretion was the order of the day at the end of a positive week for equity markets overall, in both the US and Europe. This discretion appeared to be validated after Russian troops reinforced their hold on Crimea at the weekend, with further military activity as concerns rose about whether Russia intends to go further with its military incursions. As such, markets in Europe look set to start the week on the back foot as concerns remain about the possible next movements of Russian troops on Ukraine’s eastern border ahead of a visit to Europe by President Obama, with the commander of NATO forces warning of the possibility of a move towards the Moldovan region of Transnistria. After a rebound in Chinese markets on Friday the focus returned to Asian markets, and to the floundering Chinese economy this morning, against a backdrop of concerns about credit conditions as markets fret about a series of loan defaults from a variety of small Chinese companies. This morning’s latest HSBC manufacturing PMI for March showed further deterioration to 48.1, and an eight month low, as the economy looks to try and shake-off its post Chinese New Year lethargy. This weak reading has continued to prompt speculation that the Chinese will embark on some form of program to help mitigate some of the recent weakness, hence this morning’s rebound in Asia, but any positive spill over into Europe this morning appears unlikely. While the Chinese economy appears to be struggling for momentum the French and German economy’s continue to perform at differing speeds, with the latest French manufacturing and services PMI data for March continuing to show contractions. French manufacturing PMI is expected to come in at 49.6, while services are expected to remain moribund at 47.5. The German manufacturing and services PMI data for March continues to perform well, but there are signs that it could well be starting to plateau a little, with both readings expected to slow slightly from their previous readings, coming in at 54.5 and 55.5 respectively. The broader EU measures are also expected to slow slightly to 53 for manufacturing and 52.6 for services PMI. EURUSD – the rebound off last week’s low at 1.3750 appears to be stalling around the 1.3820 level, keeping alive the possibility of further weakness towards 1.3680 with the prospect that we could well have seen the highs in the short term. The euro needs to move back above 1.3850 to stabilise and suggest a retest of the recent highs at 1.3970. The 1.4000 level remains a key psychological barrier to a move towards 1.4200. GBPUSD – the pound continues to remain under pressure with the possibility we could well test the 100 day MA 1.6425, which acted as support in February. A break below 1.6425 opens up the road for a move towards 1.6300. The pound needs to get back above the 1.6570 area to suggest a retest of the highs last week at 1.6650. EURGBP – having held above support at the 0.8320/30 area has prompted a short term rebound. We need to bear in mind the bearish engulfing candle seen last week which suggests that we may well have seen the highs in the short term. The resistance at the 200 day MA at 0.8425 remains a key obstacle to further gains. Only a move below 0.8320 retargets the 0.8270/80 area. USDJPY – the rebound seen over the last week or so needs to get back above the 102.70/80 area or run the risk of a revisit of the 101.20 area which has acted as strong support for the whole of March. As such the risk remains on the downside while below the 103.00 area. The focus still remains on the February lows at the 100.70/80 level. The 200 day MA is also a key level at 100.35. 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.