As anticipated the U.S Federal Reserve kept benchmark interest rates on hold at record near zero with the Federal Open Market Committee voted 9 to 1 in favor of maintaining existing policy measures. While the Fed acknowledged improvement in the economy they maintained an overall cautious tone stating strains in global financial markets continue to pose significant downside risks. Further transparency over the Fed's specific targets and how they relate to monetary policy were not forthcoming, as anticipated by some corners of the market. It's clear the Fed is saving unconventional measures such as quantities easing in their cunning kit if the economy begins to disintegrate once again.  U.S retail sales fell short of estimates to record growth of 0.2 percent in November against a previous and expected 0.6 percent.

The focus was also on Spain which successfully sold EUR4.941-billion of 12 and 18-month treasuries which was met with solid demand. German ZEW survey for economic sentiment fell less than anticipated in December - another supporting factor across markets. Nevertheless, as always the headwinds were still present with reports suggesting German Chancellor Angela Merkel has rejected efforts to boost the European Stability Mechanism. Across the Channel, Consumer Prices in the UK rose 0.2 percent in November, representing annual growth of 4.8 percent to match economists' estimates.

Risk currencies were out of favor once again with Europe remaining front row and centre. The Aussie dollar broke the downside of parity and Euro remained on the cusp of falling through the technical/psychological milestone of $US1.30 to lows of $US1.3008. After regaining some ground earlier this morning the local unit has taken another leg-down in the ensuing period of the Westpac Consumer Confidence data which showed sentiment fell 8.3 percent in December. The remainder of the local session will see the focus turn to a speech by RBA Deputy Governor Ric Battellino at 12:30 PM in Sydney. Local driver's aside, the momentum is certainly in favor of further downside with a sustained period below parity levels expected between now and year-end.