The selloff in Australian dollar is intensifying

• The Australian dollar selloff intensified on Monday as investor sentiment took a turn for the worse.

• The US dollar index hit the highest level since June 2017, reflecting large losses in both the British pound and euro.

• The data calendar is quiet on Tuesday, likely ensuring that sentiment and technicals will dictate broader market direction.

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The Australian dollar selloff intensified on Monday as investor sentiment took a turn for the worse.

As seen in the scoreboard below at 8.05am on Tuesday in Sydney, it fell against all of the major crosses during the session, led by steep declines against the Japanese yen and US dollar.

AUD/USD 0.7181 , -0.0043 , -0.60%
AUD/JPY 81.69 , -0.85 , -1.03%
AUD/CNH 5.0014 , -0.036 , -0.71%
AUD/EUR 0.6392 , -0.0008 , -0.13%
AUD/GBP 0.5586 , -0.001 , -0.18%
AUD/NZD 1.0683 , -0.0045 , -0.42%
AUD/CAD 0.9506 , -0.0032 , -0.34%

After falling modestly on Friday, the AUD/USD ambled its way through the Asian session, initially dipping in early trade before crawling higher in the second half of trade.

However, the Aussie's bounce fizzled in early European trade, undermined by ongoing concerns surrounding Brexit and Italian budget negotiations that saw risk sentiment sour noticeably.

"Regarding Brexit, there were further negative official and media comments over the lack of potential for a break through this week amidst increased political tension within May’s minority Government," said FX Strategists at Westpac Bank.

"Regarding Italy’s Budget, tensions persisted into today’s deadline on responses to the EU’s rejection of the initial budget proposals, whilst the Italian Government. continued to hold staunchly to their proposals."

Those concerns heaped pressure on the British pound and euro, sending the US dollar index, or DXY, to the highest level since June last year.

Further compounding the Aussie's woes, a steep selloff in European and US stocks acted to drag the AUD/USD back below the .7200 level, moving it further away from the multi-month high of .7301 struck late last week.

With less than a hour left to trade, the AUD/USD is currently buying .7181.

The Aussie's losses were even greater against the Japanese yen, reflecting the latter's safe-haven status in times of market turmoil.

It's losses were smaller against the other major crosses, reflecting that the strength in currency markets on Monday was largely a yen and US dollar story.

Turning to the day ahead, it looks set to be another session where sentiment and technicals, rather than data, will dictate the broader market direction given a lack of first-tier economic releases.

In Australia, the National Australia Bank will release its October business confidence survey at 11.30am AEDT.

While not a noted market mover, given the RBA continues to cite elevated business confidence as one factor that it expects will help to support business investment, today's report could generate some volatility, especially should confidence levels weaken unexpectedly.

The survey's measures on employment will also be eyed closely given labour market strength is a prerequisite for the RBA's forecasts for faster GDP growth and a modest pickup in wage and inflationary pressures in the years ahead.

Arriving before the NAB report, ANZ Bank will also release weekly consumer confidence data at 9.30am AEDT.

Outside of Australia the economic calendar is quiet across the Asian region, likely ensuring the gyrations in Chinese financial markets will be once again be influential on broader market movements.

Later in the session, data highlights include German inflation and investor confidence, French non-farm payrolls, UK unemployment and wage growth along with NFIB Small business optimism and budget figures from the United States.

On the central bank front, Brainard and Daly from the US Fed, along with Praet from the ECB, will also be in action.

As mentioned above, the deadline for revised Italian budget forecasts to be submitted to the European Commission will also arrive today.