Australia: With a lack of price sensitive information released during the offshore session last night, the AUD has weakened as lingering fears of debt contagion in Europe saw risk aversion trading come into play and investors reduce their holdings in the riskier AUD.

The AUD this morning is currently trading at USD0.9630.

While the AUD found some strength late in the Asian trading session and early in the London session, it followed the EUR/USD which came under pressure as investors continue to worry about possible debt problems to also include Portugal and Spain.

Today in the local session we have a raft of data due to be released at 11:30am AEST, which will give a good indication on how tomorrow's Q3 GDP result may come in.

While yesterday company operating profits and inventories came in much weaker than market expectations, it's possible that we will see a similar result today with the current account balance and the net exports of GDP for Q3 due to be released.

Most eyes will be on the net export result with markets predicting a result of -0.8%, showing that net exports subtracted significantly from GDP growth in the quarter.

Should this result come in weaker that expectations then this could see significant downgrades in tomorrows GDP forecasts; and as a result a pull back in the AUD.

Majors: With the contagion fears continuing to influence investors, last night saw the offshore equity markets take a battering.

While the DOW recovered some of its losses towards the end of the session, finishing down 0.3%, the European markets weren't so lucky.

The FTSE 100 closed down 2.1% and the Euro Stoxx 50 fell 2.4%. European banks were the main contributor to these results.

The EUR/USD also felt the pain with it falling more than two cents to be currently trading around USD1.3100.

Spain and Portugal continue to cause concerns in the market, and now Italy is looking a possible country to follow Greece and Ireland as their credit default spreads widened overnight.

The EU finance ministers have approved an outline of a long term European Stability Mechanism which will create a permanent bailout facility for possible future sovereign debt issues, but this agreement did little to allay fears in the market.

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