In what appeared to be a fairly promising start, intermittent burst of negativity from both side of the Atlantic kept risk assets from any meaningful breakout overnight with a series of U.S data points holding sentiment back. The Australian dollar fell to fresh 6-month lows of 96.72 US cents in domestic trade but managed to stage an ascent overnight to reach highs of 97.7 US cents before succumbing to moderate selling in the latter part of US trade. The Euro followed a similar pattern with emphasis on the selling with the EURUSD pair failing to build momentum above 1.24-figure before posting fresh 23-month lows of 1.2336 in recent hours.

Ahead of Friday's non-farm payrolls, jobs related data generally holds more weight with both ADP employment gauge and weekly jobless claims both falling short of expectations. The focus was also on U.S GDP which recorded annual growth of 1.9 percent in the first quarter, down from previous estimates of 2.2 percent with personal consumption and Chicago manufacturing data also failing to meet the grade.

Earlier, German retail sales recorded the second consecutive month of gains with April's print showing a rise of 0.6 percent but still record a significant fall of 3.8 percent from a year earlier. Market's found solace in the latest jobs data from Germany which recorded no change in May against the expected decline of 7,000. The official unemployment rate edged lower to 6.7 percent, the lowest rate of unemployment in two-decade - a comforting factor considering the economic turmoil in Southern Europe. Euro-Zone inflation slowed further in May with official estimates showing consumer prices rose 2.4 percent, down from 2.6 percent in April.

Key to the fortunes of the local unit in domestic trade will no doubt be the release of Chinese manufacturing PMI this morning with the HSBC PMI gauge also due for release later in the session. At the time of writing the Australian dollar is buying 97.25 US cents.