After briefly falling below 106 US cents overnight the local unit was able to regain composure over the course of US trade with price action moving back up to highs of 106.9 US cents. The US dollar continued to adhere to a hybrid of influences - but general greenback weakness assisted the local unit to move off its lows coinciding with mild strength in some sectors of the commodity space.

The greenback weakened against its major counterparts over the session despite a general risk-off market attitude. US equities were unable to scrap back any of Monday's 2.0 percent losses with the Dow and S&P losing 0.34 and 0.12 percent respectively. US jobless claims came in slightly worse than the consensus with the number of US citizens claiming unemployment benefits for the week ending May 28 falling to 422,000 from a previous 428,000. Economists had expected a fall of claims to 417,000. Meanwhile, the week of bad news for the US continues with Moody's placing the US on negative watch warning of a potential downgrades if policy makers continue to drag their feet on extending the US debt ceiling.

The Euro was the stand-out performer with price action moving to highs of 145.14 on reports Greece will avoid a full debt restructure with an all-encompassing plan that will see the private-sector to assist with Greece's funding gap along with austerity measures and government asset sales. Meanwhile, President Jean Claude Trichet also weighed in by calling for an over haul of the Euro-zone governance by creating a European Ministry of Finance - described as a "new type of confederation of sovereign states." In what has been described as one of the most significant ECB speeches in years, Trichet's plan would see this governing body have the power to enforce decisions on European peripherals who have received aid but in danger of reneging on their debt obligations.

In the absence of local economic feedback in domestic trade, the Aussie dollar will look to local and Asian equity markets for direction in the day ahead with Chinese PMI (services) due for release at 11am AEST. At the time of writing the A$ is buying 106.65 US cents.

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