Aussie Pares Gain After RBA, Services Data Watched

Aussie pares some of this week's gain after RBA left rates unchanged at 2.5% as widely expected. The central bank maintained the view that growth would be below trend in near term. And, inflation would be below target over the next one to two years. Also, it added that unemployment rate could continue to edge higher while government spending is forecast to be "quite weak". Meanwhile, the central bank also acknowledged strengthening in housing and equities which would support investments. Regarding the exchanged, its maintained that Aussie is still "still uncomfortably high" and "a lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy." Overall, the statement sounded a bit more dovish than the prior one and suggested that RBA still leaves the room open for another rate cut next year.

In US, Boston Fed Rosengren said the monetary policy will likely "need to remain accommodative for some time" to achieve full employment within a "reasonable forecast horizon". He noted that the "economy remains challenged" but saw positive developments in firm and household balance sheets. Meanwhile, he expected "fiscal headwinds" to diminish. And, he emphasized that even after Fed starts to taper the asset purchase, short-term interest rates would be lest at the "very low levels" until "much more progress" on reaching full employment and 2% inflation target.

St. Louis Fed Bullard said Fed is not in a hurry to taper the asset purchase because of "low inflation". And, he said that the government shutdown would not do lasting harm to the economy. And Fed "can't really wait for the political situation in Washington to be just right" before taking policy actions. Meanwhile, he also played down the impact of Fed chairman transition next year.

On the data front, Japan monetary base rose 45.8% yoy in October. UK BRC sales monitor rose 0.8% yoy in October. Swiss CPI, UK PMI services and Eurozone PPI will be released in European session. US will release ISM non-manufacturing index.