Aussie Mildly Lower After RBA Minutes, Consolidation Continues Elsewhere

Financial markets are generally staying in established range. Traders and investors are awaiting the FOMC rate decisions and Bernanke's press conference on Wednesday. The DOW closed 109 pts higher at 151079, near to the mid point of recent range of 14484 to 15542. The Nikkei opened lower today, but pared much of the loss at the time of writing and is back above 13000 handle. The dollar index is hovering in tight range between 80.50/81.00. In the currency markets, the EUR/USD is held below last week's high of 1.3389. The GBP/USD edged higher to 1.5751, but lacked follow through momentum. The USD/JPY hovers above last week's low of 93.78. Mild weakness is seen in Aussie following the RBA minutes today.

The RBA minutes for June 4 indicated the inflation outlook may provide scope for further policy easing. The central bank noted that "interest rates had declined further as a result of the board's decision at the May meeting." And, "the exchange rate had also depreciated noticeably, though it remained at a high level considering the decline in export prices that had taken place over the past year and a half." It also noted that "It was possible that the exchange rate would depreciate further over time, as the terms of trade declined, which would help foster a rebalancing of growth in the economy."

In Japan, Finance minister Aso said that it's "appropriate" for BoJ to stand pat on policy during the last meeting, after introducing easing of a "different dimension" back in April. He saw that "only a small segment of the market was looking for additional easing." Meanwhile, Aso also noted that Japan "hasn't been in the spotlight" at the G8 meeting for some time, and "more countries are starting to appreciate that our policies will contribute to the development of the global economy." Japan's cabinet ministers said the G8 stance was an approval of so called Abenomics.

Looking ahead, U.K. inflation data and German ZEW will be major focus in today's European session. In the U.K., headline CPI is expected to accelerate to 2.6% yoy in May, while core CPI is expected to climb to 2.1% yoy. PPI would also show higher upstream inflation. German ZEW is expected to improve to 38.1 in June, while the eurozone ZEW is expected to rise to 29.4. From the U.S., headline CPI is expected to rise back to 1.4% yoy in May while core CPI is expected to be unchanged at 1.7% yoy. New residential construction data is also slated for release.