After looking decidedly vulnerable earlier in the week, the Aussie dollar was able to make a break to the upside of 103 US cents coinciding with strength from U.S equities which saw the S&P500 rising 1.7 percent on the day.

Overnight the European Central Bank announced a coordinated effort to provide short-term loans for European banks. The ECB alongside the U.S Federal Reserve, Bank of Japan, Bank of England the Swiss National Bank will work in harmony to stave off the threat of a credit-freeze by boosting liquidity for European banks. Earlier this week saw Moody's downgrade France's second and third largest banks Credit Agricole and Societe Generale citing exposure to Greek debt which is currently under siege as markets continue to predict a near-certain default. A band aid solution or not, global market found solace in the news triggering strong gains across global equities and risk currencies gaining the upper hand against the greenback. 

The Euro continued to outperform its major counterparts briefly rising above $US1.39. Euro-zone consumer prices were stead in August to match the previous and expected annual growth of 2.5 percent. Core inflation also remained steady at 1.2 percent on year.

Across the Atlantic, U.S. consumer prices rose at an annual pace of 3.8 percent in August against an expected 3.6 percent. Core inflation which excludes food and energy also rose slightly above estimates to record 2 percent growth from a previous 1.8 percent.

In the absence of local economic feedback, we expect the Aussie dollar to take a lead from local and Asian equity markets. At the time of writing the local unit is buying 103.3 US cents, any softness across stocks may see the Aussie test 103 US cents, but we expect reasonable intra-day support at these levels.