If there's one thing we can always bank on, it's that the economic turmoil from Europe will continue the rear its ugly head from time-to-time. Overnight global markets were once again weighed down by the prospect of further downgrades to Spanish debt by ratings agency Moody's - nevertheless, this is nothing new for investors which are seemingly developing a tolerance to the bouts of ill health from Europe. US markets were able to remain reasonably composed with some assistance from more positive inflation data which showed US Consumer price index recorded 1.1 percent growth in November, largely in line with analysts' estimates.

 As investors erred on the side of caution, the US dollar was a clear winner with the Dollar index adding near 1 percent over the session with US indices finishing the day in the red. The Aussie dollar remained on the defensive making a clear break to the downside of 99 US cents to lows of 98.4 US cents. From a technical perspective this 98.4 US cent level holds reasonable support for the local unit which has managed to bounce off in recent session. Of the commodity trio the Kiwi was the biggest loser currently down near 1.7 percent against the greenback from 0900 AEDT yesterday. This theme of dollar strength played out against all of major counterparts with the Euro and sterling also losing the upper hand against the greenback at the time of writing down 1.2 and 1.46 percent respectively.

 Locally, the day ahead brings little in the way of market moving economic news with December inflation expectations and the RBA will December quarter bulletin. We expect local equities to be a key directive for the Aussie in today's session, however with little in the way of upside catalysts - barring a solid day in local equities - we expect the local unit to be testing the aforementioned support levels throughout the domestic session. At the time of writing the Aussie dollar is buying 98.6 US cents.