Risk aversion set the scene in overnight trade, with global equity markets tumbling under the weight of less than convincing economic data, disappointing profit reports and the renewed concerns of further economic casualties in Dubai and Greece. US Treasuries rose and the greenback hit 5 week highs as investors switched to preservation mode at the expense of key commodities. In typical fashion the price of Gold diverged as the US dollar made ground, falling to lows of US$1,124 an ounce. 

UK and European markets set the pace early on after disappointing production figures setting the pace for US equity markets. UK Industrial Production data fell short of expectations recording no change in the month of October, against an expected 0.5 per cent rise. Manufacturing Production also came in unchanged for October against the predicted 0.5 per cent growth, representing an annual decline of 7.8 per cent. We also saw disappointing German Industrial Production figures which fell 1.8 per cent in October against the expected rise of 1 per cent.

To add fuel to recovery concerns, credit ratings agency Fitch downgraded the credit rating of Greece which had global markets on edge, as investors contemplated the potential fallout on local economies. With the tone already set, US markets continued to trend down at the benefit of the US Dollar, despite the unveiling of a US$200 billion stimulus package to boost US employment. We also saw investors shrug off comments from Fed Chairman Ben Bernanke in which he reaffirmed the central's banks stance on interest rates to remain on hold for an extended period.  The US dollar index which measures the dollar's value relative to six major foreign currencies is currently trading near day highs at 76.21 representing a rise of 0.58 per cent.

The exception was the Japanese Yen - the currency of choice in times of adversity - which continued to strengthen against the greenback. Yesterday saw the government announce a 7.2 trillion Yen (US$81b) stimulus package, just a week after announcing 10 trillion yen cash injection in the form of short-term loans to commercial banks, in an effort to resurrect economic growth which would in-turn assist in the unwanted strength of the Japanese Yen. As the Yen makes ground against major counterpart's japans exports become less price-competitive against competing economies, thus hampering an export fuelled recovery. 

The Aussie dollar remained under pressure overnight, falling to week-lows of 90.2 US Cents as commodities lost ground on the back of the last burst of energy from the US dollar. We expect the Aussie movements to be contingent to the economic data released today with Home Loan data, Investment Lending and the Trade balance due at 11:30 AEDT.