Global markets remained under pressure overnight with negativity both sides of the Atlantic promoting losses across risk sensitive assets. Weaker than expected US data saw market participants positioned defensively after data on employment, manufacturing and housing failed to meet estimates. The number of citizens applying for unemployment benefits recording 386,000 against expectations of 370,000. The Philadelphia Fed manufacturing gauge fell to an index level of 8 from a previous 12.5. Existing home sales slid 2.6 percent in March missing estimates of 0.7 percent growth. While stronger-than-expected US data has been the common theme in recent times, a general lack of continuity continues to plague the market with little in the way of solid evidence to suggest the economy is on a sustained upside trajectory.

The economic health of the Euro-region remained a stumbling block despite well-attended debt Auctions from Spain and France. Widening yields spreads between peripheral nations and the perceived safety of German debt remains the common theme with rising Italian and Spanish yields signaling a further breakdown in confidence in the region. Conjecture over a near-term downgrade of France compounded existing fears of the systemic flow-on from peripheral nations to the heart of the Euro-zone.

The Australian dollar remained under mild pressure throughout the session but support above 103 US cent contained the selling to settle in to a 50 pip range throughout US trade. Barring a significant deterioration in sentiment across regional equity markets, we anticipate this narrow range between 103 and 103.5 US cents to hold up throughout domestic trade. The local day ahead will see the release of 1Q import and export price indices at 11.30 AEST.