Concerns over the health of European peripheral nations came the fore overnight with Spain and Italy once again the firing line. The tone was decidedly risk-off with global indices falling under the strain of renewed European debt concerns with last week's disappointing U.S payroll numbers also fresh in the minds of market participants.

European debt markets which are often the best barometer of Euro-region sentiment displayed all the hallmark signs of trouble with Spanish 10yr yields touching the six percent market while a bid for safety saw the German 10yr benchmark equaling the lowest level. Italian bonds were also sold off forcing the corresponding yields to highs of 5.66 percent ahead of an auction on Thursday. It's apparent the latest bout of negativity is not a singular European issue with general growth concerns stretches across both sides of the Atlantic, however we naturally see the most vulnerable take the largest hit.

True to form, the US dollar was the currency of least resistance behind the Japanese Yen which by far was the strongest currency across all major counterparts. Commodity bloc currencies were the hardest hit with the Kiwi suffering the largest losses against the perceived safety of the US dollar and Japanese Yen with the CAD and Aussie trailing close behind. Risk currencies in general remained casualties of the latest bout of risk aversion with the Australian dollar breaking the downside of 103 US cents to lows of 102.47 US cents.

It's clear the momentum remains against the Australian dollar with price action continuing to adhere to a near 2-month old descending channel. Although there is a case for a short term retracement we anticipate the local unit will remain under pressure with a lower channel above US dollar parity likely in the coming weeks.

Locally, the focus will turn to the release of employment data on Thursday which is expected to show the Australian economy created 6,500 new jobs in March against previous losses of 15,400. The official unemployment rate is expected to have risen to 5.3 percent from 5.2 percent. The focus will also remain on economic feedback from our largest customer with Chinese growth data due for release on Friday. Economist's estimates suggest China will grow 1.9 percent in the first quarter to represent annual growth of 8.4 percent from a previous 8.9 percent. At the time of writing the Aussie dollar is buying 102.55 US cents.