Risk appetite is driving the dollar lower in early US session as stocks rebound strongly after yesterday's fall. Dow opens higher and the development continues to indicate it has bottomed out in near term at 8259 last week. Rally in stocks provide some support to commodity and pressure the greenback in general. In addition, dollar is pressured by disappoint employment data released today even though the impact is somewhat offset by better than expected ISM report. Euro, and to a lesser extent, Sterling, are lifted by upside surprises in today's PMI manufacturing data. Some more downside might be seen in the greenback today. But after all, traders remain generally cautious and will likely keep major pairs in range ahead of tomorrow's key events of NFP and ECB.

US ADP private employment report showed much deeper that expected contraction of -473k in the job markets in June, following a revised -485k contraction in May. The data was much worse than expectation of -374k. Challenger report, on the other hand showed -9.0% yoy growth in job cuts in June, above May's 7.4%. The employment component of ISM manufacturing index showed some impressive improvement from 34.3 to 40.7 though.

Talking about the ISM, the headline index continued the up trend started in Jan and rises further from 42.8 to 44.8 in June. Production component is back above 50 at 52.5 while price paid component also climbed to 50. However new orders dropped back from 51.1 to 49.2. After all, the report in general shows improved conditions in the US manufacturing sector.

Some positive data were released from Eurozone earlier today. Eurozone PMI manufacturing in June was revised up from 42.4 to 42.6 while Germany PMI manufacturing was revised up from 40.5 to 40.9. ON the other hand, retail sales in Germany rose much more than expected by 0.4% mom in May even though yoy rate was down deeper than consensus by -2.9%. Elsewhere, Swiss SVME PMI rose more than expected from 39.8 to 41.8 in June. UK PMI manufacturing index also beat expectation by rising to 47 in Jun.

Released overnight, Japan's quarterly Tankan survey showed improved, but lower than expected, sentiment in large corporations while small firms continued to struggle in June. The brightest spots were the decline in 'inventory level for finished goods and merchandise' and improvement in financial position of large corporate. Large manufacturer business condition DI rose to -48, worse than consensus of -43, from -58 in March while the reading for large non-manufacturer improved modestly to -29, compared with market expectation of -26 and -31 in March. For smaller companies, manufacturing and non-manufacturing DIs came in at -57 (consensus: -49, March -57) and -44(consensus: -40, March -42), respectively, signaling domestic demand remained bleak. More details in BOJ's Quarterly Tankan Survey: Improvement Seen but Failed to Alleviate Recession Worries