Ella 
Here’s what you need to know on Tuesday, June 6:
The Australian dollar outperformed its rivals early on Tuesday after the Reserve Bank of Australia (RBA) unexpectedly decided to raise the policy rate by 25 basis points to 4.1%. The greenback has struggled to find demand as markets see an increasing chance that the Federal Reserve (FED) will keep key interest rates on hold at its next meeting. The economic calendar will feature retail sales in the euro zone and the IBD/TIPP economic optimism index in the US.
For the second consecutive meeting, the RBA chose to raise its policy rate contrary to market expectations. In its policy statement, the RBA reiterated that the board remained firmly determined to bring inflation back to target, adding that further tightening of monetary policy may be required. AUD/USD rallied sharply during the Asian trading hours, reaching as high as 0.6650 by the end of the day, up more than 0.5%.
RBA: Some further tightening of monetary policy may be required.
On Monday, the ISM Services PMI report showed that growth momentum in the services sector weakened in May. In addition, the report also showed that employment in the sector has declined, while imported inflation has also moderated. In turn, the U.S. dollar index (DXY) faced bearish pressure again and erased its gains to end the day flat. The U.S. dollar index held in negative territory just below 104.00 in European morning, with the benchmark 10-year U.S. Treasury yield consolidating Monday’s losses around 3.7%.
EUR/USD staged a rebound on Monday night and ended the day above 1.0700. The pair traded up and down in a tight range early Tuesday in the absence of fresh catalysts. Speaking to the European Parliament in Brussels on Monday, European Central Bank (ECB) President Christine Lagarde reiterated that there is no clear evidence that underlying inflation has peaked.
GBP/USD erased most of the day’s losses during the US session on Monday. The pair was flat during the European session, just below 1.2450.
Gold prices posted small daily gains on Monday, benefiting from lower U.S. yields. XAU/USD traded in a narrow channel around $1,960 early Tuesday.
USD/JPY fell below 140.00 on Monday and extended its slide towards 139.00 during the Asian trading hours on Tuesday. Bank of Japan Governor Kazuo Ueda said earlier in the day that quantitative and qualitative monetary easing (QQE) will continue until they achieve their inflation target.
Bitcoin faced heavy selling pressure, falling more than 5% on Monday. BTC/USD consolidated its losses near $25,800 on Tuesday. Ethereum remains dangerously close to $1,800 in the European morning after falling 4% on Monday.
