Daily Report: Aussie Firm As RBA Stood Pat

Aussie remains firm after RBA left rates unchanged at 3.50% as widely expected. Governor Stevens noted that after "material easing in monetary policy" over the past six months, the monetary stance remains "appropriate." It's noted in the accompanying statement that inflations are expected to be "consistent with the target" and growth "close to trend" even though the international outlook was now more subdued comparing to a few months ago. RBA cut a total 125 basis points in four of its previous seven meetings. The benchmark interest rate is now at the lowest level since November 2009. More rate cuts are still expected by economists, probably as much as 75bps over the next 12 months, starting August. But some postponed the expectation of another cut as today's statement signaled that RBA is adopting a wait-and-see attitude and would probably need more time to gauge the effect of prior cuts and global developments.

The euro pared some of yesterday's loss against the dollar and yen. ECB governor council member Nowotny said that it's unrealistic to build the ECB up into a "single, unified bank supervisor" of all of European's banks. But he said there could be division of labor as local regulators would make "national decisions" while ECB takes up international quality control. The Troika will meet with Greece today but the formal negotiations on bailout terms could begin as late as July 24. Troika officials have indicated that there could be different approaches to implement the reforms but the budget deficit reduction target won't be changed.

On the data front, Japan monetary base rose 5.9% yoy in June. China non-manufacturing PMI rose to 56.7 in June. Australia building approvals jumped sharply by 27.3% mom in May. UK PMI construction, mortgage approvals and M4 money supply will be released later today. The eurozone will release PPI. The US will release factory orders.