Australian dollar stays in tight range after RBA meeting minutes explained the rate cut this month. The minutes noted that "while prospects for growth were positive, there was room for stronger growth, which could be assisted by lower interest rates." Meanwhile, "the risks associated with rising household sector leverage and rapid gains in housing prices had diminished." RBA also noted that "there continued to be considerable uncertainty about momentum in the domestic labor market and the extent to which domestic inflationary pressures would rise over the next few years." Globally, RBA noted that "the outlook for the Chinese economy remained an important source of uncertainty for global growth and the demand for commodities." And, "the effect of the easing in growth in China had been evident in a number of East Asian economies and emerging economies in other regions with strong trade links to China."
In US, San Francisco Fed president John Williams urged policy makers to raise inflation target as the current 2% target "is not well suited" for the low interest era. He noted that "there is simply not enough room for central banks to cut interest rates in response to an economic downturn." He also emphasized that "we can wait for the next storm and hope for better outcomes or prepare for them now and be ready." He also proposed an alternative way of nominal GDP target as there is "a built-in protection" against debt deflation. Beside, he said there are "limits" to monetary policies and "the burden must also fall on fiscal policy do it its part".
Looking ahead, UK inflation data will be a main focus in European session. Headline CPI is expected to be unchanged at 0.50% yoy in July while core CPI might slow to 1.3% yoy. RPI and PPI will also be featured. In Eurozone, German ZEW and Eurozone trade balance will be released. Later in US session, US will release CPI, housing starts and industrial production.