Markets continue to stay in tight range in early US session after release of better than expected ISM Non-manufacturing report. The headline index rose to 50.9 in September, back above 50 level for the first time in a year. Dollar and yen are soft but so far the downside is limited and near levels in major pairs are still holding firm. Stocks were mildly higher in US while commodities currencies consolidates. There isn't any key theme in the markets for the moment and consolidations might continue further for the rest of the session.

Released earlier, UK Services PMI rose more than expected to a two year high of 55.3 in September, better than consensus of 54.5, suggesting recovery in the services sector is gaining momentum. Eurozone services PMI was also revised higher from 50.6 to 50.9 in September. Eurozone Sentix Investor Confidence improved to -12.6 in October. Retail sales dropped less than expected by -0.2% mom in August.

RBA rate decision will be the main focus in the coming Asian session. RBA Governor Glenn Stevens said that 'things are proving more resilient than earlier thought and there are reasons to think that that may also continue', suggesting the Governor's view on continuing upside risk to the economic growth. We expect the accompanying statement for October's meeting should include some hawkish comments and signal that the RBA is moving towards a less accommodative monetary policy.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 88.95; (P) 89.44; (R1) 90.27; More.

USD/JPY continues to stay in familiar range today and consolidation from 88.23 might extend further. Another rise to 90.42 resistance and above cannot be ruled out. But after all, upside is expected to be limited well below 92.52 resistance and bring fall resumption. Below 88.59 minor support will flip intraday bias back to the downside. Break of 88.23 will target 87.12 low.

In the bigger picture, USD/JPY's pattern of lower highs, lower lows since 2007 high of 124.13 is still intact, so is the down trend from there. Break of 87.12 key support will pave the way to extend the down trend to next key level of 1995 low at 79.75. On the upside, above 92.52 resistance will indicate that a short term bottom is formed and will bring stronger rebound. But after all, fall from 101.43 is still expected to continue as long as 97.77 resistance holds.