A quiet start to the third quarter ahead of key data releases

Following a volatile American session amid soft US inflation data and month-end flows on Thursday, markets stay relatively calm early Friday. Nevertheless, investors remain cautious ahead of June inflation figures for the euro area. In the second half of the day, the ISM Manufacturing PMI report will be featured in the US economic docket. The US Dollar Index recovers modestly toward 105.00 and the US stock index futures trade deep in negative territory.

In an interview with Austrian newspaper Oberoesterreichische Nachrichten, European Central Bank (ECB) policymaker Robert Holzmann noted that he would have preferred the bank to hike its policy rate earlier. Eurostat is expected to report that the annual Harmonised Index of Consumer Prices (HICP) rose to 8.3% in June from 8.1% in May.

Earlier in the day, the data from China showed that the Caixin Manufacturing PMI improved to 51.7 in June from 48.1 in May but this print doesn’t seem to be having a positive impact on market sentiment in the early European session.

Meanwhile, cure oil prices fell sharply after OPEC+ decided to stick to its current plan of increasing the output by 648,000 barrels per day in August. The group refrained from discussing the output strategy from September. The barrel of West Texas Intermediate (WTI), which fell more than 3% on Thursday, was last seen losing 0.8% on the day at $105.15.

EUR/USD staged a decisive rebound during the American session and ended up closing in positive territory on Thursday. The pair stays on the back foot early Friday and edges lower toward 1.0450.

GBP/USD registered small daily gains on Thursday but turned south early Friday. The pair was last seen retreating toward 1.2100.

USD/JPY fell sharply on Thursday amid falling US Treasury bond yields. With the benchmark 10-year US T-bond yield losing nearly 2% below 3% so far on the day, the pair trades in negative territory below 135.00 in the European morning.

Gold failed to take advantage of falling yields and closed the fourth straight day in negative territory. Sellers continue to dominate XAU/USD’s action early Friday with the pair trading below $1,800 for the first time since mid-May.

Although Bitcoin climbed above $20,000 on Friday after having dropped below that level on Thursday, it failed to preserve its recovery momentum and was last seen trading near $19,300. Ethereum continues to trade within a touching distance of $1,000.

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