Forex Today: US Dollar hit by US data, RBA decision looms


Share:

The most significant event during the Asian session will be the Reserve Bank of Australia's meeting, where another interest rate hike may be announced. Ahead of the meeting, Japan will report on House Spending, ANZ will release the Commodity Price Index, and Australia will release Q1 Current Account Balance data. 

Here is what you need to know on Tuesday, June 6:

On Monday, economic data from the US weighed on the US dollar, trimming Friday's gains. Last week's upbeat employment data had boosted the Greenback, but on Monday, the numbers came in the opposite direction and weighed on the currency. The Dow Jones lost 0.59%, and the Nasdaq declined 0.09%.

Data released on Monday showed that the US service sector continued to expand, albeit at a more moderate pace than in April, with the ISM Services PMI declining to 50.3 in May from 51.9 in April. This reading came in below the market expectation of 51.5. The Employment index dropped below 50, and the Prices Paid index fell from 59.6 to 56.2. The report presents evidence of easing inflation and softer activity, offering arguments for those Federal Reserve (Fed) officials who favor a pause at the June meeting. US yields dropped after the report and then trimmed losses. The DXY finished around 104.00, far from the 104.40 (June 5 high).

The Japanese yen was the best performer among majors, boosted by declining government bond yields and a drop in equity prices on Wall Street. USD/JPY pulled back from near 140.50 to 139.20. Japan will release Overall Household Spending on Tuesday.

Economic data from the Eurozone came in below expectations (EZ PPI, Sentix Investor Confidence, and HCOB PMI). After the figures, European Central Bank President Christine Lagarde said there is no clear evidence that underlying inflation has peaked. EUR/USD rebounded from 1.0680, boosted by a weaker US dollar, to 1.0720. On Tuesday, German April Retail Sales are due.

USD/CHF dropped, closing slightly above 0.9050. The Consumer Price Index rose 0.3% in May in Switzerland, and the annual rate dropped from 2.6% to 2.2%.

AUD/USD rose for the third consecutive day but faced resistance at 0.6640 again. The Reserve Bank of Australia (RBA) will announce its decision on Tuesday. Market consensus points to the central bank remaining on hold with the cash rate at 3.85%, but it seems like a close call as analysts warn that a 25 basis points rate hike is possible.

Analysts at Rabobank wrote: 

It is our house view that the RBA will keep policy steady on June 6.  This would allow policymakers to absorb the Q1 GDP report due for release on June 7 and give them more time to assess the impact of the policy tightening to date.  That said, we do expect more policy tightening later in the year, and there are good reasons to suspect that this week’s policy decision will be a close call

NZD/USD rose modestly but maintained its position well above 0.6000. The ANZ Commodity Price Index is due on Tuesday, and the RBA's decision is important for the Kiwi.

USD/CAD moved sideways around 1.3440, looking steady ahead of Wednesday's Bank of Canada meeting. The Loonie had rallied earlier on Monday amid a rise in crude oil prices but then pulled back.

Oil prices finished flat after experiencing significant gains following Saudi Arabia's announcement of an extra cut in production in July. The WTI barrel finished under $72.00. Gold bounced from the $1,940 area to $1,965, boosted by the weaker US dollar and lower yields.

Bitcoin tumbled and dragged other cryptocurrencies down after the Securities and Exchange Commission sued Binance, alleging that the company operated an illegal exchange. BTC/USD lost 6% and dropped to $25,600.

 


Like this article? Help us with some feedback by answering this survey:

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

EUR/USD declines toward 1.0800 after US data

EUR/USD declines toward 1.0800 after US data

EUR/USD lost its bullish momentum and declined toward 1.0800 in the second half of the day on Thursday. The upbeat Jobless Claims and February PMI data from the US helps the US Dollar find demand and weighs on the pair.

EUR/USD News

GBP/USD drops below 1.2650 as USD rebounds

GBP/USD drops below 1.2650 as USD rebounds

GBP/USD reversed its direction and declined below 1.2650 after rising above 1.2700 earlier in the day. Renewed US Dollar strength on the back of better-than-forecast Jobless Claims and upbeat PMI data makes it difficult for the pair to keep its footing.

GBP/USD News

Gold stays below $2,030 as markets assess US data

Gold stays below $2,030 as markets assess US data

Gold is having a hard time preserving its bullish momentum and trading below $2,030 in the second half of the day on Thursday. The benchmark 10-year US Treasury bond yield holds steady near 4.3% after US data, not allowing XAU/USD to gain traction.

Gold News

XRP price declines with developments in SEC v. Ripple lawsuit

XRP price declines with developments in SEC v. Ripple lawsuit

XRP price dropped below $0.55 on Thursday as both Ripple and SEC work on remedy-related briefs. March 13 is the next key deadline for the SEC v. Ripple lawsuit.  

Read more

Nvidia drives global markets to records, as European stocks defy German economic gloom

Nvidia drives global markets to records, as European stocks defy German economic gloom

Markets are a sea of green after Nvidia’s earnings report has boosted global risk appetite and stock markets surging. Boost to Nvidia’s share price after another monster earnings report and super forecast has led to a collective relief rally across markets.

Read more

Forex MAJORS

Cryptocurrencies

Signatures