Aussie Lower After RBA Left Rates Unchanged

Aussie weakens mildly today after RBA left the cash rate unchanged at 2.75% as widely expected. The accompanying statement noted further decline in commodity prices and continued moderation of global inflationary outlook over recent months. Policymakers viewed that, despite the decline in currency in recent month, Aussie has stayed 'at a high level' but it is 'possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy'. RBA believed that 'the easier financial conditions now in place will contribute to a strengthening of growth over time, consistent with achieving the inflation target'. With the policy rate at 4.25%, the central bank viewed that it has 'remained appropriate for the time being' and the inflation outlook 'may provide some scope for further easing, should that be required to support demand'. More in RBA On Hold Amid Recent Downtrend In Aussie.

In UK, the British Chambers of Commerce warned that "economic growth could be slow" and "sustained upturn cannot be taken for granted". It urged that "business access to finance, and working capital in particular, must be assured." BCC urged BoE to boost lending by expanding the so called Funding for Lending Scheme and widen the asset purchase program to include securitized debts from smaller companies. BCC said that the manufactories' domestic sales index rose to 16 in Q2, up from 12 in Q1. Export sales index rose to 23, up from 19. The domestic services gauge improved to 20, up from 12. Export services measure rose to 36, up from 33.

Overall, markets are relatively steady waiting for the employment data from US later this week. DOW closed 65 pts higher but failed to close above 15000 level. Asian equities were mixed. US treasury yields extended recent consolidations with 10 year yield closed mildly higher at 2.49%. Gold also extended last week's recovery and is trading above 1250 level for the moment. Dollar index hovers around 83 level.

On the data front, Japan monetary base rose 36% yoy in June, labor cash earnings was flat yoy in May. Looking ahead, UK will release PMI construction. Eurozone will release PPI while US will release factory orders.