Global markets were hit hard overnight unwinding Friday's post-EU summit rally with market participants once again focusing on the never-ending debt crisis in Europe. The greenback was a standout performer against major peers with risk currencies falling under the weight of fears the new measure planned by EU leaders may not be enough to stave off a broader downturn.

A decidedly risk-off tone was initially triggered as ratings agency Moody's renewed calls to review all European Union members citing a failure by EU leaders to deliver decisive policy measures at last week's summit. This follows last week's call by Standard & Poor's to place 15 Euro-zone nations on negative watch, including that of Europe's flagship economies Germany and France. The repercussions of which would be just another thorn in the side for global risk assets with downgrade of the Euro-Zones largest economies likely to affect the triple-A status of the European Financial Stability Facility.

Quite simply, the EU summit was sink or swim moment and judging by the ensuing price action across global risk assets, it's not the all-encompassing solution the market was anticipating. Another stumbling block for markets overnight was a drop in Chinese exports with data showing annual growth of 13.8 percent in November - the lowest growth numbers recorded since 2009. Market participants consider a narrowing of the trade surplus a direction reflection of the economic turmoil in Europe with diminished demand from the heart of the Euro-zone.

A slight concession to the risk averse tone was a well attended Italian debt auction selling the targeted EUR7-billion of 1-yr Treasury bills at a yield 5.952 percent represent a significant improvement November. The latest bout of negativity manifested directly to the Euro with price action making a break to downside of $US1.32 to lows of $US1.3162.

The Aussie dollar also bore the brunt of investor concern with price action falling to support levels at 100.5 US cents. From a technical perspective we expect support levels of 100.5 US cents to hold on moderate selling through the domestic session, however the momentum is in favor of further weakness with sub-parity levels expected between now and year-end. Local economic data today includes the CBA-HIA housing affordability index, housing starts and NAB business confidence/conditions. At the time of writing the local unit is buying 100.75 US cents.