Improved risk-appetite stemmed the slide in the major US equity bourses while weighing on the greenback against the major currencies. The Australian and Canadian dollars edged up higher versus the US dollar, gaining by nearly 1.2% and 0.8%, respectively. Spot gold retreated back beneath the $1,200-per ounce level, lower by 1.4% to $1,192 while crude oil eased slightly to settle around the $72-per barrel level.

The Aussie traded sharply higher on the session, benefiting from the RBA's monetary policy announcement overnight. The RBA held interest rates unchanged at 4.5%. However, in the accompanying policy statement, Bank Governor Stevens provided a more upbeat assessment, saying that growth in China has begun to moderate at a more sustainable level with the economic expansion in Asia being very strong.. Additionally, Stevens expects inflation to hover near the upper half of the target zone, with CPI above 3% in the coming year.

In the week ahead, central bank policy decisions will remain in focus as the European Central Bank and Bank of England are both scheduled to announce on Thursday morning. Both central banks are expected to leave interest rates unchanged.

The economic calendar was light on for the session, with the release of the June non-manufacturing ISM figure. The report missed consensus estimates, declining by more than forecast to 53.8 from 55.4 from May. Meanwhile, Canada reported a sharply weaker than anticipated building permits reading, down by 10.8% and worst than the 2.0% expected decline.