Just when you think upside momentum is building to the upside; the balance of risk has erred to the side of caution overnight. Global equities retreated and risk currencies sold off with the Euro-zone debt debacle once again in the firing line.

As widely anticipated, the European Central Bank cut 25 bps from its refi rate, lowering interest rates to match record lows of 1 percent. It was however the post conference decision which found risk assets once again on the back foot. Investors have been pining hopes of greater ECB participation in the Euro region crisis with recent innuendo the ECB will step-up their efforts to bring down borrowing costs for struggling Euro-zone economies. It's clear that while market expects greater ECB participation, President Mario Draghi is trying to moderate these expectations and reiterated the importance of fiscal compact in the Euro region.

Across the Channel, the Bank of England kept benchmark interest rates on hold at 50bps, with no changed announced to the GBP275-billion quantitative easing measures.

After taking a hit on the local jobs data yesterday, the Aussie dollar traded in a broad 2.3 US cent range overnight, with price action making a convincing break to the upside of 103 US cents to highs of 103.8 US cents but began a strong decent coinciding with a weakness across global risk assets to lows of 101.5 US cents.

The greenback was the primary beneficiary of the decidedly risk-off market demeanor with commodity currencies the Aussie and CAD the largest losers of the majors. The Euro remain pressured in the ensuing period of the ECB press conference, once again making a break to the downs side of $US1.33 to lows of $US1.3288. At the time of writing the Euro and regain ground against the greenback with price action around the 1.3350 levels.

The day ahead will see the focus shift to China with the release of November consumer price data which is expected to see inflation slow to an annual rate of 4.5 percent from a previous 5.5. In addition, China will also release PPI, fixed asset investment, industrial production and retail sales. This will no-doubt be the key directive for the local unit today with the short-term balance of risks likely to shift to upside should we see an on-target to lower inflation reading with strength in second tier data industrial production and retail sales. Technicals suggest strong support around 101.5 US cents, however we consider a break to the downside likely should China disappoint and regional equities fall. From here market participants will be waiting in anticipation for feedback from the EU summit. At the time of writing the Aussie dollar is buying 101.7 US cents.