Forex Today – Asian Session: Dollar Affected by US Data, RBA Decision Looms

The most important event of the Asian session will be the meeting of the Reserve Bank of Australia, in which a further increase in interest rates could be announced. Ahead of the meeting, Japan will report on Housing Spending, ANZ will publish the Commodity Price Index and Australia will publish the Current Account Balance data for the first quarter.

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

On Monday, US economic data weighed on the US dollar, paring Friday’s gains. Last week’s jobs data had boosted the dollar, but on Monday the figures went the other way and weighed on the currency. The Dow Jones lost 0.59% and the Nasdaq was down 0.09%.

Data released on Monday showed the US services sector continued to expand, albeit at a more moderate pace than in April, with the ISM services PMI falling to 50.3 in May from 51.9 in April. This reading was below market expectations, which had expected a 51.5. The employment index fell below 50, and the prices paid index dropped from 59.6 to 56.2. They reported that the moderation in inflation and activity offers arguments to Federal Reserve (Fed) officials in favor of a pause in the June meeting. US yields fell on the report and then trimmed losses. The DXY ended around 104.00, far from 104.40 (June 5 high).

The Japanese Yen was the best performing currency among the majors, driven by declining government bond yields and falling stock prices on Wall Street. The USD/JPY pair it fell back from 140.50 to 139.20. Overall household spending will be published in Japan on Tuesday.

Eurozone economic data disappointed expectations (PPI EZ, investor confidence sentix and PMI HCOB). Following the figures, European Central Bank President Christine Lagarde stated that there is no clear evidence that core inflation has peaked. The EUR/USD pair it bounced from 1.0680, driven by US dollar weakness, to 1.0720. German retail sales for April will be released on Tuesday.

USD/CHF fell, closing slightly above 0.9050. The consumer price index rose 0.3% in May in Switzerland, and the annual rate fell from 2.6% to 2.2%.

The AUD/USD pair It rose for the third day in a row, but again found resistance at 0.6640. The Reserve Bank of Australia (RBA) will announce its decision on Tuesday. Market consensus is for the central bank to stand by with the cash rate at 3.85%, but it looks like a close call as analysts warn a 25 basis point rate hike is possible.

Rabobank analysts wrote:

In our view, the RBA will keep monetary policy stable on June 6, which would allow policymakers to digest the first quarter GDP report, due out on June 7, and give them more time to assess the impact of monetary policy tightening to date. That said, we do expect monetary policy tightening later in the year and there are good reasons to suspect that this week’s decision will be very close.

The NZD/USD pair rose slightly, but held its position above 0.6000. The ANZ Commodity Price Index will be released on Tuesday, and the RBA decision is important for the kiwi.

USD/CAD It moved sideways around 1.3440, looking stable ahead of the Bank of Canada meeting on Wednesday. The Loonie had rallied on Monday on rising crude oil prices, but then fell back.

The prices of pOil ended flat after posting large gains following Saudi Arabia’s announcement of a further production cut in July. the barrel of WTI it ended below $72.00. Gold bounced from the $1,940 zone to $1,965, buoyed by US dollar weakness and declining yields.

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