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

The most significant event during the Asian session will be the Reserve Bank of Australia's meeting, where there may be an announcement of another interest rate hike. 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 a decline in government bond yields and by a drop in equity prices in 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 that 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 again faced resistance at 0.6640. 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.

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.