As the title suggests overnight market activity resembled more of a bloodbath than an orderly market. US indices were hit hard with the Dow Jones and S&P falling 5.55 and 6.66% respectively as market participants questioned the repercussions of the first ever cut to the US long-term debt rating. On Friday ratings agency Standard & Poor's made the unprecedented step of downgrading US debt from triple-A to double-A+, citing increasing political risk and the rising debt burden.

The US dollar has continued to show its safe haven credentials recording gains against most major counterparts with exception to Japanese Yen and Swiss despite the threat of intervention. Ironically, the bid for safety has also seen a flight to US treasuries with 10 yr yields now down 0.24% to 2.32% - Gold also continues to forge new all-time highs with price action currently trading at $1,722 a troy ounce.

Commodity bloc currencies have been the hardest hit with the Aussie dollar taking a 2.4 percent hit for the week against the greenback - only to be outdone by the Kiwi which is now trading 2.7 percent lower than Friday's close. The biggest losses across commodity currencies were recorded against the perceived safety Swiss franc with the local unit losing near 4 percent on week with losses against the Japanese Yen not too far behind.

In the last 24 hours the Aussie dollar has carved through the downside of various support points and is now sitting convincing below the 200 day MA which implies bearish momentum. From here there are a hybrid of themes that will guide the Aussie dollars fortunes, clearly we're on the back foot with any corrective behaviour at points of support quickly met with impressive selling. The local unit will no doubt be highly reactive to the host of data coming out of China this afternoon with CPI, retail sales and industrial production due for release. We're expecting the next major support level to come at USD parity. At the time of writing the Aussie dollar is buying 101.4 US cents.

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