After kicking off the week with a mild bid tone, risk currencies have once against succumbed to general risk avoidance in the domestic session with the Aussie dollar now leading the way south-bound. The US dollar is markedly higher against major counterparts with exception to the Japanese Yen which remains the currency of least resistance, despite the looming threat of intervention.

Although we are only seeing limited gains against the greenback, the risk-off tone has promoted Yen strength to a larger degree across commodity bloc currencies with the AUDJPY pair now breaking through the downside of ¥74. After an early morning burst of energy the Aussie dollar has fallen more than 1 US cent from intra-day highs of 98.37 US cents achieved this morning and remains on the back foot just below 97 US cents.

Support for the US dollar has promoted natural weakness across the commodity space with the safety of Gold not even immune to the decidedly risk-off atmosphere.  The big moves of the session have come from Silver which has taken a huge hit to lows of US$27.28 an ounce to represent a staggering 30 percent hit over the last three sessions.  Losses across Gold, Silver and copper have also coincided with an increase of margin requirement by the Chicago Mercantile Exchange, which has effectively squeezed out the weaker hands in the market and taken off some of the speculative sheen.  

With little in the way of major marking moving data on the local docket, the key directives for the Aussie dollar will continue to come from abroad, with the European debt debacle no doubt front row and centre. Thursday will see German Parliament vote on the expansion of the European Financial Stability Facility (EFSF) while conjecture over Greece's ability to secure next bailout installment may see risk currencies remain heavy early in the week. The so-called 'troika' which is made up of representatives from the European Union, International Monetary Fund and the European central bank are due to return to Athens this week to further evaluate Greece's progress. While we may see some positive headlines from Europe in the week ahead, the general sense of impending doom has and will likely remain the primary theme as European leaders struggle to build a consensus on the right course of action to avoid a full scale crisis. 

Across the Atlantic, all eyes will be on U.S. GDP which is expected to have grown at an annual pace of 1.2 percent in the second quarter from a previous 1 percent. US consumer confidence, durable goods and personal consumption data will also make up a reasonably quiet week from a macro perspective. Fed Chairman Ben Bernanke is also due to speak on Wednesday.

At the time of writing the Aussie dollar is buying 96.9 US cents.