European stocks are likely to open on a cautious note Friday after robust U.S. economic data boosted the dollar and bond yields.

Concerns about higher inflation and sooner-than-expected monetary policy tightening are back in focus, with New York Fed President John Williams saying that it makes sense for Fed officials to begin discussing their options for adjusting policy.

Asian markets traded mixed and gold hovered near two-week lows after seeing its worst tumble since February, while oil dropped from over two-year highs on concerns about the patchy roll-out of anti-coronavirus vaccinations around the globe.

It’s a busy day ahead on the economic calendar, with Eurozone retail sales for April and construction PMI figures from Germany due out later in the session.

ECB President Lagarde and FED Chair Powell are scheduled to speak and any chatter on monetary policy could sway the market mood.

In the United States, trading is likely to be driven by reaction to the monthly jobs report, which could have a significant impact on the outlook for monetary policy.

Economists expect the report to show employment jumped by 664,000 jobs in May after climbing by 266,000 jobs in April. The unemployment rate is expected to dip to 5.9 percent from 6.1 percent.

U.S. stocks ended lower overnight as upbeat private payroll, jobless claims and service sector activity data led to renewed concerns about the outlook for monetary policy. Investors also mulled over a new report that Biden may be open to a lower tax hike.

The Dow slipped 0.1 percent and the S&P 500 dropped 0.4 percent while the tech-heavy Nasdaq Composite lost 1 percent.

European stocks ended Thursday’s session broadly lower as upbeat euro zone business growth data fanned fears of rising inflation.

The pan European Stoxx 600 eased 0.1 percent. France’s CAC 40 index shed 0.2 percent and the U.K.’s FTSE 100 dipped 0.6 percent, while the German DAX rose 0.2 percent.

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