GBP Drops After Weak Jobs, US CPI, IP Next

London session sees USD stronger across the board. GBP drops after disappointing labor market data. EUR ignores decent Ezone industrial production amid ongoing Greek debt uncertainty. US Consumer inflation industrial production is next.

GBP drops after claimant count Change showed the largest increase since February 2010 standing at 19.7K vs. 7.1K expected. Unemployment rate stayed at 7.7% but the Average Earnings Index decreased from 2.4% to 1.8%. GBPUSD is currently about 120 points below London open.

EZ Industrial Production for April improved to 0.2% from previous unchanged reading. Market expected a contraction by 0.1%. The fact that the Euro ignored this news and continued lower, combined with ever increasing spread between German and EZ periphery bonds shows that the pressure on the Euro is building. The meeting of EZ finance ministers who failed to achieve anything significant did not inspire much confidence either.

New York session kicks off at 8:30 am ET with US May CPI expected to decrease from 0.4% to 0.2% which would be the lowest reading since 12/2010. Core CPI is expected to grow at steady pace at 0.2%. The annual CPI is expected to increase from 3.2% to 3.4%. As QE2 comes to an end, the various inflation measures become even more important because the inflation level may determine a course of future FED action.

TIC data has been declining for five straight months showing less interest that foreigners have in holding longer term US securities. On a net basis, capital flow is expected to show an improvement to 45.3B from previous weak print of 24B. TIC data is due at 9:00 am ET.

9:15 am ET May Industrial Production expected to increase to 0.2% after unchanged reading last month.

Low volatility that is often seen during New York afternoon could be stirred up at 3:45 pm ET when BoE's Mervyn King gives speech in London.