The Aussie dollar rallied to highs of 104.73 US cents overnight following the Euro and equity markets higher before succumbing to broad based greenback strength as the US session drew to a close. U.S. equities managed to squeeze out mild gains by the close after earlier in the session staging a relief rally of sorts on the news of Libyan rebels were hours away from overthrowing the Gaddafi empire.  Nevertheless, with Gaddafi no less defiant to the very end, conjecture surrounding Bernanke's speech in Jackson Hole, Wyoming this Friday began to guide sentiment. To ease or not to ease, that is the question market participants are asking ahead of Jackson Hole, with many speculating the Fed will embark on a third round of quantitative easing. Meanwhile, Gold continued to forge new all-time highs with price action making a break to the upside of US$1900 to current levels and highs of US$1912.50 a troy ounce.

The day ahead will see the focus turn to rates speculation once against with Deputy RBA Governor, Ric Battellino due to deliver a speech in Sydney. Local traders will no doubt focus on the release of the HSBC Flash China manufacturing PMI at 12.30pm. With a host of companies due to report today, local equity markets should also provide direction. At the time of writing the local unit is buying 103.95 US cents - we expect any upside to be met with resistance around 104.8 US cents with any downside to be contained 103/.1 US cents.