Aussie recovers mildly today after RBA left cash rate unchanged at 2.25%. That's a bit of a surprise to those who expected a cut. The accompanying statement isn't much different from the prior one. A key point to note is that while RBA noted that neither growth is lending to housing investors nor home owners are picking further. That might give the central bank some room to ease policy further. And RBA maintained that "further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target." Overall, it's still firmly expected that RBA will cut rates again, and, most likely in May. Also released from Australia, retail sales rose 0.7% mom in February versus expectation of 0.4% mom.
In US, Atlanta Fed Dennis Lockhart said he's "biased toward the July or September dates as opposed to June" for the first rate hike. He noted that the first quarter was "anomalous again" just like last year but he's "not ready to conclude a slowdown in underway". He still expected "a moderate pace of growth between 2.5 percent and 3 percent" with "continued progress on employment and a firming up of the price data." And he maintained his view that there will be a rebound in Q2 with "resumption of stronger growth".
New York Fed William Dudley said that the timing of the first rate hike "will be data dependent and remains uncertain because the future evolution of the economy cannot be fully anticipated". Meanwhile, he expected the following path to be "relatively shallow" since "headwinds in the aftermath of the financial crisis are still in evidence." And he will watch to "determine whether the softness in the March labor market report evident on Friday foreshadows a more substantial slowing in the labor market than I currently anticipate."
Looking ahead, UK PMI services will be a main focus today and is expected to rise to 57.1 in March. EUR/GBP is still held below near term resistance at 0.7403 and thus maintained a bearish outlook. We'd favoring another fall through 0.7226 minor support to 0.7013 recent low. But disappointing data from UK might trigger a break of 0.7403 to indicate near term reversal instead.
Other data to be released include Swiss foreign currency reserves, Italy services PMI, Eurozone PMI services final, Sentix investor confidence and PPI.