The latest round of economic data has helped to calm investors' fears that a double dip is around the corner. China's latest PMI manufacturing survey rose slightly to 49.8 from 49.3 last month, this is still in contraction territory but at least it's moving in the right direction. The German data was more mixed. Although the PMI manufacturing survey was better than expected, the services survey was lower and the ZEW survey of investor sentiment crashed through the floor. The forward-looking component dropped to its lowest level since the end of 2008. This index tends to overreact to the prevailing market conditions as it's a survey of investment professionals. Thus, this index could be an over-reaction and if market conditions improve then we could see a rebound later in the year.

Stocks are slightly lower as we enter the afternoon in London, but the recent economic data means that the investment community is now re-assessing its gloomy view on the economic outlook. Of course we are still data watching - so far we know is that the economy is not doing that well, but it might only be a slight dip rather than an outright plunge. It's been an extremely unclear period for economic growth; the clouds may be lifting so we need to keep watching to see what's underneath.

US stocks have also opened up slightly higher as investors reign in their enthusiasm. As we get closer to the weekend the speculation about a possible QE3 announcement from Bernanke will reach fever pitch. We may see some of the recent market euphoria get curbed as investors worry that Bernanke won't deliver the goods and instead have to settle with being soothed by his soft dulcet tones as he tells the market that the Fed will provide support but only if the economic outlook deteriorates sharply. The Fed still believes that growth will pick up later this year, and core inflation is running closer to the target 2%, this doesn't seem like optimal conditions for more monetary stimulus.

Elsewhere, former Fed Chairman Greenspan commented that the euro was about to break down, and the euro came off its highs against the dollar. While the markets would pay attention to Greenspan it could also be coincidence: EURUSD had just hit 1.4500 - a pretty stiff resistance level. Gold is higher and the dollar is making a bit of a rebound as we progress through to the end of the European trading day.

Overall, the curb your enthusiasm theme is dominating markets and we could be in for a range-bound week prior to Friday's Jackson Hole shenanigans.

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