The mild risk adverse tone seen in yesterday’s session amplified overnight with equity markets and higher yielding investments pummeled. US stocks were slammed overnight with the DOW and S&P losing 2.65 and 3.1 percent respectively.

Key data released by the conference board showed US consumer confidence slide to 52.9 in June from a previous 62.7 – Analysts had expected a mild retreat of confidence to 62.5. Concerns about high levels of European debt remain front and center – and certainly a catalyst for the sharp south bound moves overnight with jitters ahead of Friday’s non-farm payrolls also keeping investors on guard. Non-farm payrolls expected to show 110,000 job cuts in June after the Census Bureau let go about 243,000 workers – which is likely to keep distorting payroll figures in the near term. The official Unemployment rate is expected to edge up from 9.7 to 9.8 percent.

To add to the mix we also have concerns China’s economic activity may slow after the conference board said its China leading economic index rose 0.3 percent in April, well less than the 1.7 percent gain originally reported. China’s considered the economic savour for most nations and the premise of a consolidation of growth is always likely to induce a risk adverse tone, by default this is going to hurt higher yielding asset classes.

True to form, the risk adverse tone saw investors dropped higher yielding commodities and currencies like hot potatoes, instead, seeking the perceived safety of the USD, Yen and safety of government debt. The Japanese Yen was the primary beneficiary risking to near 8 week highs against the greenback. The Aussie dollar suffered steep losses throughout the US session as sentiment turned sour. In the last 24 hours the Aussie has fallen through 3 big figures – overnight the Aussie fell to lows of 84.6 US cents. The Aussie is currently buying 85 US cents. The Euro also suffered a similar fate, albeit in more subdued fashion, slipping to lows of 1.2150. At the time of writing the Euro is buying US$1.2180.

Domestically, given the dire lead from abroad, local equities are poised for steep losses which is likely to keep upside for the Aussie dollar limited. Potential upside may come in the form of new information pertaining to Julia Gillard’s take on the government’s controversial super profits mining tax – with which the market is awaiting some kind of clarity later this afternoon. Economic data today includes new homes sales for May and the RBA will report on private sector credit for May.