Risk aversion was once again the common theme overnight, as European markets kicked off in a negative tone led by a weak knock-on from US and Asian sessions. In typical style, the US Dollar became the prime beneficiary posting gains against major counterparts. The weaker than expected US consumer confidence data on Tuesday continued to play on the minds of investors, at the expense of higher yielding currencies and commodity markets. Little support was seen for the Euro, which fell for the 3rd consecutive session, touching lows of US$1.4690 overnight.

Despite US Durable Goods orders coming in on target at 1 percent, the rise of the greenback continued in US trading as investors found little comfort in the latest housing data which showed New Home Sales drop a surprise 402,000 for the month of September, against a consensus of 440,000. Market optimism has taken a step back; with investor concern the recovery of the US economy may not be a smooth ride. Economic indicators are providing mixed signals and investor mood is swinging in the wind, ready to hit the sell trigger at the first sign of trouble.

Locally, yesterday saw the Aussie dollar retreat post inflation figures which saw it break US$92; the ensuing minutes saw a swift retreat as investors digested the latest growth figures, which showed the Consumer Price index great 1 percent in the third quarter, taking the annual inflation rate to 1.3 percent. Although the latest inflation data exceeded analysts' expectations of a 0.9 percent rise, it lacked the 'surprise' element many were predicting, which makes the threat of a 50 bpts rate hike on cup day less likely.

Overnight we saw the Aussie dollar slaughtered as greenback strength prevailed, breaking 91 US-Cents, barely flirting with US$.90 to settle at current levels of US$.8970. We are seeing some big ranges on the Aussie as a result of changes in risk appetite, with near term movements highly contingent to economic feed-back from the states. When we see negative feed-back it magnifies the Aussies movements, as the move to safety props the up the greenback and demand for commodities decline, evident in gold falling to three week lows of US$1026.60 overnight.