Japanese yen remains firm in early US session as risk aversion continues to dominate the markets. Yen's strength is seen across the board and in particular against AUD, GBP and NZD. Some stabilization is seen in early US session after release of stronger than expected ISM non-manufacturing index. However, today's sharp fall in yen crosses still carry some technical significance as the medium term trend line support are finally taken out in EUR/JPY, GBP/JPY and AUD/JPY which is building up the case for medium term rally in yen. Major global indices including Nikkei, FTSE 100, DAX, CAC 60, are down over 1% on concern of sustainability of recovery in the economy. Dow opens lower in early US session and dives to as low as 8211 level but recovers mildly. Nevertheless, the break of head and shoulder neckline support in Dow does suggest more downside ahead. Crude oil also falls to as low as 63.4 so far and remains pressured.

Despite falling against yen, dollar does manage to strength against most other major currencies today. However, the greenback seems to be losing upside momentum in early US session and we might see some sideway trading first. Nevertheless, dollar index's break of the near term channel resistance today suggests that choppy consolidation from 81.36 has completed at 79.36 already. We're favor more upside in the dollar index as long as 80.27 minor support holds. Break of 81.36/47 resistance zone will confirm that whole rise from 78.33 has resume and should then target 82.63 cluster resistance (38.2% retracement of 89.62 to 78.93 at 82.64) next. Below 80.27 will delay the bullish view and bring some more sideway trading first.

On the data front, ISM non-manufacturing index beat expectations by rising to 47 in Jun, getting closer to 50 level. Improvements are also generally seen in the components with new orders rising to 48.6 and employment rising to 43.4. Price paid components also rose back to above 50 at 53.7. Eurozone Sentix Investor Confidence expectedly deteriorated to -31.3 in Jul. Japan Leading index rose slightly from 76.2 to 77 in May.

Looking ahead in the coming Asian session, RBA will leave the cash rate unchanged at 3% for the third months, citing facts that both domestic and global economic conditions have shown signs of improvement. In the accompanying statement, we believe Governor Glenn Stevens will reiterate the central bank's stance to monitor the impact of previous rate cuts and government cash handouts on the economy.