US stocks suffered significant losses to begin the day, but they recovered by the closing as bond yields fell, resulting in valuations being less strained.
The 10-year Treasury benchmark yield decreased to its lowest point in two months. Bond prices are rising as market expectations for future Fed rate hikes are receding amid indications that inflation may have crested.
As concerns about a recession increased, oil prices fell. Demand for energy may have peaked according to energy traders who wagered that after the big US holiday, generally there are travel figures close to records.
One obstacle to lower energy prices was the strengthening Dollar. In Shanghai, China, a fresh wave of extensive testing was also started after previously in the week reports of numerous Covid-19 cases.
The possibility of tighter limits should the number of cases grow would dampen regional anticipation for the session of July 6. Despite this, the Australian Dollar’s decline against the US Dollar might persist.
The New Zealand Dollar is facing growing challenges as milk prices keep falling. The Kiwi economy relies heavily on the export of milk, which makes its currency susceptible to excessive fluctuations in the price of the good.
After a 1.3% decline in a couple of weeks, the global dairy trade price index for New Zealand saw a 4.1% decline early on July 6. The grain market has fallen more within the past 12 hours, echoing the movement witnessed in the larger food commodity market. Wheat and corn futures in New York dropped by close to 5% yesterday.
As usual, after a rate decision, the Reserve Bank of Australia’s chart bundle is expected to go up. Although the figures will be helpful in assessing the RBA’s recent decision and potential course of action, market risk patterns are prone to take precedence. The greatest risk to traders is expected to come from headlines of curfews and additional restrictions coming from China.
AUD/USD is facing a significant trendline, which if breached could cause prices to drop much lower into early 2020 levels.
The sliding 20-day Simple Moving Average (SMA) may act as resistance as bulls could opt for maintaining support by making prices surge. Movements under and down of their corresponding midpoints are apparent for MACD and the RSI indices.