Payrolls the focus with the ECB sitting on their hands

• European Central Bank to emphasise possible measures in event of lower inflation

• Chinese services PMI edges down from 6 month high in June

• Payrolls expectations revised higher as ADP hits near 2 year high, we look for 240k

• GBP eyeing up 1.72 in GBPUSD with services PMI at 09.30

Today is so chock full of event risk it is difficult to know where to start; a European Central Bank meeting, non-farm payrolls and initial jobless claims readouts from the United States and services PMIs and ISMs from around the world are all due at some point during today's session. It is said that today will be the hottest day of the year in the UK and we have the data calendar to match.

Starting with the ECB meeting it is obvious in our minds that current policy, as far as the main refinancing rate and the deposit rate are concerned, will stay as is. There is a lot of debate at the moment within wider economic circles as to the ease with which monetary policy is "transmitted" to participants in the economy - be they individuals or businesses; the key to successful and helpful transmission comes in not pulling levers and pushing buttons at every opportunity.

We must also look to see what it was that provoked the European Central Bank into changing policy in June and not before. The reputational damage that would have occurred had they not, following the transparent pledge that they were "comfortable", is an important element but what drove them to that point was inflation.

We have been seeing low rates of inflation through periphery Europe for the past year or so but it was only the spread of strong disinflationary pressures into core Europe - Germany, France and Holland - on which we saw the European Central Bank act. June's preliminary CPI number for the Eurozone as a whole stayed at 0.5%, matching the current cyclical low. Until that moves lower, and causes longer term inflation expectations to move lower as well, then the ECB will sit on its hands.

There is an obvious risk to the euro this afternoon through Draghi's speech should he continue to emphasise what the ECB could do - namely QE and outright asset purchases - to help the Eurozone economy and, in turn, drag the euro lower. All the chatter before June's meeting was about the strength of the euro. A move in EURUSD from 1.3950 to 1.37 in the past month isn't exactly momentous after all.

EURUSD weakness could also come from a new run of USD strength and for that we must look to today's payrolls announcement at 13.30. Whether you use yesterday's ADP announcement as a precursor to today's Non-farms announcement is up to you of course, we prefer not to given the poor correlation of the two.

Yesterday's ADP print of a 281,000 job increase - the highest since November 2012 - is impressive - and will have had analysts scrabbling to amend their forecasts. We are happy to stick with the prediction of 240,000 that we made on Monday morning but the prospects of a higher surprise are definitely there. ADP has come in around 20,000 jobs lower than payrolls this year - could we be looking at the first +300k print since January 2012.

Chinese services PMI has kicked off the day in strong form, although slightly lower than last month's 6 month high. 55.0 is a strong number and only slightly off May's figure of 55.5; new orders seem to have been the laggard as they fell to 50.7 from May's 52.7, the biggest drop in at least a year. Much like the run of manufacturing data on Tuesday, those from the European continent are scattered through the morning; Italy's is due at 08.45, France at 08.50, Germany at 08.55, the Eurozone at 09.00 and the UK's at 09.30 - all times are BST. The US's measures, PMI and ISM, are due at 14.45 and 15.00 respectively.

The news from the UK continued to support sterling yesterday and much like the manufacturing sector survey on Tuesday, there is very little to be negative about in June’s survey of the construction sector. New orders are expanding at the best rate since January, mainly through residential and commercial building projects, and employment has responded by rising by the most in one month for 17 years. If there is one thing to keep half an eye on, it's the increases in supply costs and further increases in wait times. Producer prices increases are encouraging for the broader inflation outlook but must be moderated in order to allow further strong, healthy progression from this sector.

Have a great day.