• Dollar under pressure as US CPI data looms
• Sterling gets a lift as UK jobs report vindicates another BOE rate hike
• UK May payrolls change 23k vs -135k prior
• BOE appointee Greene: It is reasonable to expect inflation to come down fairly quickly
• China reportedly considering broad stimulus package to bolster economic support
• OPEC maintains demand outlook for the year but warns on economic risks
• Germany June ZEW current conditions -56.5 vs -40.0 expected
• Germany May final CPI +6.1% vs +6.1% y/y prelim
• Spain May final CPI +3.2% vs +3.2% y/y prelim
• US May NFIB small business optimism index 89.4 vs 89.0 prior

Markets:

• GBP leads, USD lags on the day
• European equities mixed; S&P 500 futures up 0.1%
• US 10-year yields down 4.1 bps to 3.724%
• Gold up 0.4% to $1,964.37
• WTI crude up 1.8% to $68.32
• Bitcoin up 0.8% to $26,085

European trading today served more or less as a placeholder ahead of the US CPI data to come later.

The dollar dropped in the build up to the main event as markets seem to be leaning towards a softer report later in the day. EUR/USD briefly clipped the 1.0800 mark and is keeping just below its 100-day moving average of 1.0805 for now. USD/JPY is little changed though around 139.40-50 levels, despite lower Treasury yields.

The pound was a notable gainer after the UK labour market report showed a fall in the jobless rate while wages continue to run hot. That saw GBP/USD push up from 1.2530 to 1.2565 and is now keeping at the highs around 1.2575.

That saw money markets price in an additional rate hike as well for the BOE, with the terminal rate now seen at 5.75%.

Besides that, commodity currencies are also seeing a decent advance with USD/CAD down 0.2% to 1.3345 after rising yesterday on a plunge in oil prices. The key trendline support around 1.3336 is still the big technical level to watch for now.

Then, we have AUD/USD up 0.4% to 0.6780 as buyers are nearing a test of the April and May highs near 0.6800.

Equities were firmer earlier to start the session but have given back nearly all of its gains as traders appear to be squaring positions ahead of the key risk event in around 30 minutes‘ time.

This article was written by Justin Low at www.forexlive.com.