What to watch for on Tuesday, June 7:
Market sentiment turned from optimistic during Asian trading hours to pessimistic during US trading hours. The initial good mood was supported by hopes that the global economic situation would start to improve after Beijing continued to lift coronavirus-related restrictions.
Sentiment turned south at the open on Wall Street as investors fear the US Federal Reserve will maintain its aggressive policy for the time being, increasing the chances of a recession in the country. The non-farm payroll report, published last Friday, was a factor that reinforced these speculations.
US Treasury yields soared, with the 10-year yield hitting 3.04%.
The US dollar started the day on the wrong foot, but strengthened in the second half of the day, ending the day with gains against all of its major rivals.
The EUR/USD pair is trading below 1.0700, although the action around it was limited by a European holiday. GBP/USD is trading around 1.2530 following British Prime Minister Boris Johnson’s vote of confidence. 211 Conservatives voted for Johnson, while 148 said they had lost confidence in the prime minister.
Commodity-linked currencies trimmed early gains and settled around their opening levels, with AUD/USD hovering around 0.7200 and USD/CAD trading around 1.2580.
Haven assets were the hardest hit. Gold has dipped to trade around $1,841 a troy ounce, while USD/JPY hit a new multi-year high at 132.00, now a handful of pips below the level. The USD/CHF pair rises to 0.9705.
Oil prices fell, and WTI is now trading at $118.20 a barrel.
The Reserve Bank of Australia will be the star as it announces its monetary policy decision early on Tuesday.
Source: Fx Street
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