Behind us is quite a quiet night, where USD tried to pick up the lost ground from yesterday. In general, changes in the currency market are small with the best attitude towards the USD, which, however, looks like nothing more than attempts to reverse Monday's drops. Apart from AUD/USD, changes in crosses are close to 0.15%. EUR/USD came back just under 1.17, and USD/JPY is attacking the level of 110.00, for now without success.
The PMI index for the Chinese services sector in May remained at 52.9 pts, as expected. With PMI Composite at 52.3, this indicates a better attitude of the service sector over factory production.On the stock market, we are continuing a positive climate from other markets. After the SP500 closed yesterday's session by an increase of 0.45%, today Japanese Nikkei225 grows 0.2% and Chinese Shanghai Composite gains 0.5%. The increases are smaller than yesterday, which suggests striving for stabilization.Oil prices are bouncing after almost a 2% drop yesterday, but rising US production and expectations for higher OPEC deliveries are limiting the rebound.
On Tuesday 5th of June, the event calendar is quite busy in important data releases. PMI Services and Composite PMI data from across the Eurozone will be in the eye of any trader today, together with Retail Sales data with the EU. Later on, the US will post ISM Non-Manufacturing data, JOLTs Job Openings data and Final Services PMI and COmposite PMI. There are some speeches scheduled from ECB President Mario Draghi and BOE Deputy Governor for Financial Stability Jon Cunliffe.
AUD/USD analysis for 05/06/2018:
The Reserve Bank of Australia has kept the cash rate at 1.5% in line with expectations. There were not many changes in the official statement as well. The bank is satisfied with the continued improvement of the labor market situation with expectations of acceleration in wage growth. RBA further expects that low interest rates support the economy, although the further process of limiting unemployment and returning inflation to the target will be slow. There were no explicit references to the level of the exchange rate in the text of the statement.
Let's now take a look at the AUD/USD technical picture at the H4 time frame. The pair made a modest decrease of 10 pips to 0.7625 after the interest rate decision was released, which, however, is consistent with the general appreciation of USD. The market has hit the 61% Fibo at the level of 0.7659 and currently is testing the higher boundary of the parallel channel around the level of 0.7640. The momentum remains strong, but the market conditions are now close to being overbought, so a corrective pull-back will be needed. The nearest technical support is seen at the level of 0.7603.