RBA Does 50 bps; Awaiting ISM Manuf after Chicago Drop

RBA Cuts; UK manufacturing PMI slowed. Market awaits ISM manufacturing following yesterday's disappointing Chicago PMI figures. We also have a few Fed speeches. Ashraf's Intermarket Insights will be released after the London Close.

USD Eases against all majors except the CAD following earlier strength. The weakest currencies are AUD and NZD.

Despite the fact that banks in many European countries are closed in observance of Labor Day, market volatility was not low. EURUSD climbed to 1.3277 before it sold off, GBPUSD was under pressure since the beginning of the London session and JPY crosses bounced slightly higher. FTSE 100 gained about 0.2%.

By the end of the Asian session, the AUD dropped from 1.0400 to 1.0310 after the RBA opted for a 50 bps cut to 3.75% surprising the market that had expected only 25 bps cut. Weaker economic conditions and inflation that is likely to be lower than previously expected were noted in the statement.

UK manufacturing PMI declined to 50.5 in April from 51.9 indicating slowing sector growth. New export orders that fell at the steepest pace since 5/2009 along with factory gate price inflation that rose to 7 month high contributed to the decline. GBPUSD fell to 1.6190 but has erased a portion of its gains.

The US session brings ISM manufacturing at 10:00 am ET which is expected to decline in April to 53 from previous 53.4. Note yesterday's release of the Chicago PMI showed a decline to 56.2 in April, far below the 61.0 expected and the worst reading since November 2009.

Construction spending which is due at the same time is seen higher in March at 0.5% from -1.1%.

Markets could also be influenced by a number of speeches today. FOMC member John Williams speaks at 11:00 am, FOMC member Jeffrey Lacker participates in a panel discussion at 11:30 am, FOMC member Dennis Lockhart delivers a speech at 12:30 pm and finally BOC governor Mark Carney speaks at 1:05 pm ET.