After all the action from the weekends downgrade of nine European nations by Standard and Poor's followed by Martin Luther King public holiday overnight in the US, you could have assumed that it would have been a quiet night on the currency front. 

Yet we all know what they say about assumptions, S&P followed up with a downgrade of the European Financial Sustainability Fund (EFSF) rating from AAA to AA+.

After the weekend downgrades the move was not a massive surprise as the nation's make up the bulk of the funding for it, with the still AAA Germany.  The move did not have the same affect after the Euro took a bath on Friday night shedding 2 cents versus the US dollar; the move saw it maintain the level from Friday down at 1.2660 USD still sitting around lows last seen in August 2010.

The Australian dollar overnight however was a strong performer despite the downgrade, falling 30 pips from Fridays high before the mass downgrades hitting a peak of 1.033 USD before trailing off this morning.

The Dollar was helped by French debt auction that saw just fewer than 2 billion Euros worth of one year bills with yields dropping 4.8 basis points from the Jan 9 auction. 

When looking at the performance of the Australian dollar, it highlights the decoupling of the Euro from risk assets this year, as the Euro did not make up any significant dint into the losses it suffered from Fridays session. The Euro has range traded for the last 24 hours staying in a 35 pip zone since the downgrades on Friday.

As mentioned the Australian dollar is slightly off from its overnight highs as we lead into today's main event - Chinese GDP.  With no US equity leads, positive night on the CAC, Dax and FTSE may help the Australian dollar as equity markets open up today, yet more likely is the dollar to sit steadily until the Chinese GDP and industrial production data is released at 1pm. China GDP is expected to be down to 8.7% from a revised 9.1% last quarter, which would be the worst print since October 2009 and would be the 7th straight quarter of slowing GDP growth.  At the time of writing the Australian dollar is at 1.031.