Bell FX Currency Outlook: The AUD is stronger this morning, currently trading at USD1.0400, after a better than expected result for the Spanish bill auction overnight saw equity markets rise and risk appetite return to the market.

Australia: While the successful result out of Spain overnight boosted markets, better than expected earnings result from some large US companies, upgrades to the IMF global growth forecasts as well as some positive housing data out of the US also played a part in the increased appetite for riskier assets including the AUD.

Yesterday during our local session the RBA released the minutes from their April meeting, where the cash rate was kept on hold at 4.25%. The minutes were dovish and continued in the same vein as previous statements, outlining that they are prepared to cut rates should the CPI data due out next week show that inflation continues to remain within their target band of 2 - 3%.

The Board stated that "if slower growth in demand could be expected to result in a more moderate inflation outcome, then a case could be made for a further easing of monetary policy".

Given the markets are currently pricing in an almost certain cut in interest rates at the May meeting, the minutes released yesterday had little effect on the AUD

Majors: Equity markets were also the beneficiaries from positive offshore developments overnight. In the US, the DOW and the S&P 500 rose 1.5%, while the Nasdaq was up 1.8%.

Gains were even more pronounced in Europe with the FTSE 100 up 1.8% at 5,767 and Germany's DAX up 2.7%. As mentioned above, the positive Spanish bill auction had a large impact, with the result reducing the fears of another "Greece-like" bailout for the region. Spain successfully auctioned EUR3.2bio of 12 - 18month bills, which was above its target amount.

While this bill auction was encouraging for the region, we will really be able to gauge how the economy is progressing with a Spanish bond auction planned on Thursday.

Germany also contributed, with economic sentiment in Europe's largest economy having the best result since June 2010, which exceeded most analysts' expectations.

The IMF also moderately upgraded its global growth forecasts for both 2012 and 2013; with the 2012 result expected to now be 3.5% compared to a previous expectation of 3.3%. The US forecasts were also upgraded, China's growth was unchanged and it is still expected that Europe will contract in 2012.
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