After a period of relative solace, there was blood on the streets once again overnight with US equities pummeled under the weight of global growth concerns with a string of uninspiring economic data thrown in for good measure.  Global markets were also deterred with the ongoing debt crises in Europe after German Finance Minister Wolfgang Schaeuble indicated an expansion of the European Financial Stability Fund was not on the agenda. Concerns the debt crises is spreading to the heart of the Euro-zone were compounded earlier this week after growth in Germany slowed.  

US Jobless claims also came in above expectations with 408,000 new applications for unemployment benefits for the week ending August 12 against expectations of 400,000. Steep losses on the Philadelphia fed manufacturing index and south-bound existing home sales further soured investor mood which saw the Aussie dollar take an 80 pip hit in the minutes that followed. 

US consumer prices surpassed estimates with headline inflation recording annual growth of 3.6 percent against economist's consensus of 3.3 percent. Core inflation which strips out the food and energy components also rose above expectations at an annual pace of 1.8 percent from a previous 1.6 percent. Any strength in inflation is also seen as a possible deterrent for the Federal Reserve to embark on another round quantitative easing which will no doubt be a guiding factor between now and next week's meeting in Jackson Hole.

Significant losses in base metals and energy markets provided the perfect platform for the US dollar to extend gains against major counterparts. The Aussie dollar followed equity and commodity markets lower with price action falling to lows of 103.50.

The premise of Japanese intervention has given the USDJPY pair a glass bottom just above the post-war lows of Y76.28. Likewise, the Swiss franc has remained relatively composed considering the level of risk avoidance with the in-focus EURCHF pair finding support after bouncing off session lows of 112.38.

The decidedly risk-off atmosphere saw gold once against forge a new all-time high of $US1,829.15 a troy ounce and remains well positioned around $US1,823.00.

In the absence of local economic data, we expect local and Asian equity markets to the prime barometer in the day ahead. We consider a break to the downside of short term support at 103.5 US cents to be slowed by a clustering of price action slightly above 103 US cents which should contain selling pressure. At the time of writing the Aussie dollar is buying 103.6 US cents.