The Aussie is steady in Asian session after RBA left interest rate unchanged at 2.50% as widely expected. Most importantly, the central bank maintained the neutral stance and noted "the most prudent course is likely to be a period of stability in interest rates." Other parts of the statement were basically unchanged from the prior one. Growth is expected to be "a little below trend" over the year ahead. It would take "some time" before unemployment declines consistently. And, exchange rate "remains high by historical standards". Inflation is expected to stay in target range of 2-3% for the next two years based on current accommodative monetary stance. Also released from Australia, trade deficit narrowed to AUD -1.68b in June with 0.9% yoy growth in exports and 4.8% yoy growth in imports.
In Europe, French president Hollande urged ECB and Germany to do more to fight against the "real deflationary risk". He said "weak inflation too has negative fiscal consequences on revenues as well as on debt". And, "a lot will depend on the level of the euro, which has weakened over the past few days but not enough." And he asked ECB to "take all necessary measures to inject liquidity in the economy". Meanwhile, he said Germany's trade surplus and financial situation should allow it to "invest more".
In UK, former MPC member Blancheflower said BoE would be underestimating the slack in the economy. He said current BoE officials are making "arbitrary downward adjustments to labor market slack" and that's "inappropriate". He noted mush less wage pressure than BoE estimated and emphasized that "the crucial test is how quickly nominal wages start to rise, but there is absolutely no sign of this happening."
Released from China, the HSBC services PMI dropped to 50.0 in July, hitting the lowest level since November 2005 when the series began. That compared to 53.1 in June, which was a 15-month high. HSBC noted that "today's data points to the need of continued policy support to offset the drag from the property correction and consolidate the economic recovery." Released over the weekend, the official non-manufacturing PMI dropped to 54.2 in July.
Looking ahead, services data will be the main focus for the rest of the day. UK PMI services is expected to improve to 58.1 in July. Eurozone will release PMI services revision and retail sales. US will release ISM non-manufacturing composite, which is expected to rise to 56.6. US will also release factory orders.