After three consecutive days of gains, U.S. equities hit the wall overnight and took a few steps back as the focus once again turned to the economic health of the Euro-zone. Unfounded rumors of an imminent downgrade for Germany appears to have kept market participants on edge despite confirmation from the top ratings agencies that they have no changes to Germanys triple-A rating.

True to recent form, speculation surrounding Bernanke's Jackson Hole later this evening was also a primary market moving theme as investors pared back expectations of further quantitative easing. 

There's little doubt we're also seeing some paring back of QE3 expectations. This unwinding of stimulus expectations has been largely supportive of the US dollar over the last two sessions which appears to have dislodged USDJPY from below the ¥77 levels with the pair rising to overnight highs of ¥77.7.

U.S. jobless claims failed to inspire market participants with 417,000 new application for unemployment benefits registered for the week ending August 19 - Consensus estimates suggests 405,000 new claims.

After slumping to lows of $US1.4327 the Euro has managed to remain composed throughout the session with price action in a tight 30 pip range but unable to make a break through key resistance $US1.4390. The Aussie dollar managed to break out to the upside of yesterday's 104.25/75 range with price action rising to highs of 105.13 US cents before beginning a steady descent in the latter half of U.S. trade.

The focus today will be directed to RBA Governor Glenn Stevens who is due to appear before the Hours of Representative Standing Committee at 0930 this morning.  We will also be watching China with industrial profits and the MNI business conditions survey due for release. At the time of writing the Aussie dollar is buying 104.3 US cents.