Mid-Day Report

Mid-Day Report: Markets in Tight Range, ISM Services Beat Expectation

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.