As expected, the RBA left overnight interest rates unchanged at 4.75% this morning, citing heightened uncertainty on global growth prospects and a weaker domestic backdrop as the reasons for their cautious approach. It was also noted that lowered expectations for near-term growth and decreased risk of labour costs rising would allow the central bank to take a more lenient approach to inflation. Following the announcement, AUDUSD fell from 0.9520 levels down to a low of 0.9456, but after that knee jerk reaction to the statement the pair has steadily recovered its losses and managed to climb above 0.9500 once more.
In the rest of the Asian session, investors have seemingly been preoccupied with Greece concerns, as equity markets have had another difficult day. The Nikkei is down just over a percent on the day, whilst the Hang Seng is trading -0.7%; the Shanghai exchange remains closed for the Chinese national holiday. Gold has continued to attract decent bids which have taken us back up to $1675 levels, and should we break above $1677 resistance, there is a decent likelihood of a move back to $1755.
Yesterday's Eurogroup meeting provided little in the way of new information or decisions with which to calm the Eurozone debt crisis fears today; and of particular angst to investors is the fact that no final decision has yet been made on whether Greece will receive the next instalment of badly needed bailout cash. Instead, markets have had to content themselves with the assertions of Greek officials that the country will not run out of cash before mid-November.
Coming up in today's session, the UK PMI construction figure for Sep is expected to come out at 51.6, down from 52.6 seen last month. Eurozone PPI for Aug is forecast to drop to -0.2% MoM, 5.8% YoY, whilst the afternoon session highlight will be US factory orders (exp: 0.0%, prior: 2.4%).