Some optimism going into the jobs report but ADP keeps traders on their toes

Eurozone inflation data gave investors cause for optimism today while the US ADP report may make some people nervous ahead of tomorrow's jobs data.

A rare positive surprise from Eurozone inflation data

We had a rare positive inflation surprise today, with both headline and core eurozone HICP releases coming in much lower than expected. While energy was largely behind the decline in the headline rate - as it has been since it peaked in October - services inflation moderated last month, with the launch of subsidized public transport in Germany weighing on transport services prices.

This will still be seen as progress though and if we see further signs over the coming months, the ECB should feel comfortable enough to bring the tightening cycle to an end, in line with market expectations. Base effects may be less favourable on the core side over the next couple of months though which could see the number edge a little higher once more.

Does the ADP point to another strong US labour market report?

It's probably a good thing that investors have come to distrust the ADP release as an accurate precursor to the NFP, or today's release may have really spooked investors hoping for a more modest report on Friday. And traders will be hoping that ADP is wildly wrong once more or the Fed may feel it has little choice but to hike rates again this month.

While there have been some steady signs of progress on inflation, the economy has remained very resilient, as has the labour market which has shown barely any signs of weakness. There is an expectation that this will change over the summer but those optimistic beliefs have been proven wrong repeatedly and if ADP does prove even remotely accurate, they may be about to be again.

Oil tests lows as traders not deterred by Saudi warnings

Oil prices have rebounded off their lows today, having at one stage come very close to the bottom seen in March and May. It's a very interesting development coming just before OPEC+ meets this weekend and following warnings from the Saudi energy minister to "watch out".

Of course, oil traders can argue that the Chinese economic rebound has stalled, manufacturing activity around the world is struggling, Germany is in recession and the US may be headed for one. The questions now are will OPEC+ see it that way and could Russia be convinced to cut again? If not, Brent crude may well test those recent lows more forcefully.

Yields edge lower, lifting gold ahead of the jobs report

Yields have eased in recent days which has enabled gold to claw back some of the losses it incurred over the last month on the back of repeated disappointment with the economic data. That isn't to say the correction is over in the yellow metal but a weak jobs report tomorrow could help it gain some traction.

Weak labour market figures have proven a lot to ask until now and today's ADP release may suggest we're in for disappointment once more. Its track record is poor but traders may be feeling a little less confident now. Should we get some rare positive data, $2,000 could represent a significant psychological hurdle to the upside.

Will Bitcoin test the May lows again?

Bitcoin enjoyed a bit of a recovery last week but appears to have lost its way a little, falling over the last couple of days to trade back below $27,000. The key level below remains $26,000 where it has now found strong support on two occasions over the last month. Below that, $25,000 could offer an interesting test being a big barrier of resistance back in February.