Bell FX Currency Outlook: The Australian dollar is slightly lower overnight, as news that the Spanish government will need to bailout one of its largest banks, with the possibility of more bailouts to come.

Australia: With the US markets closed for the Memorial Day weekend, and some of Europe's markets also on holiday, it was a relatively quiet offshore trading session. During our local session yesterday, the AUD followed the positive lead from local equity markets. After opening around USD0.9800 yesterday morning, during the course of the day the AUD made a concerted push towards USD0.9900, reaching a high of USD0.9891.

The AUD has fallen slightly from these levels, currently trading around USD0.9850 after concerns regarding the stability of Spain's
finance sector once again monopolised headlines.

Bankia, one of Spain's largest banks asked the government for a EUR19bio bailout. Reports then followed that other banks might also require assistance; with another EUR30bio of financial aid required. This news spooked the markets somewhat. With the AUD rising almost 1% from Friday's close, some analysts believe that the drop in the AUD last week, seeing its lowest level since 25th November 2011 was too large and too fast.

With a lack of local top tier data due out today, we expect the AUD to trade in a fairly tight trading range, possibly drifting lower as equity markets digest the news out overnight.

Majors: With all the developments out of Europe, their local currency is suffering. The EUR/USD has tumbled more than 5% on the month and hit a 22month low during Friday's trading session. Despite the news regarding the Spanish bank problems, the EUR/USD did gain some ground, currently trading around USD1.2535, as the opinion polls in

Greece showed that the newly formed New Democracy (pro-bailout) party has swung into first place in opinion polls ahead of the June 17 election.

European equities were stronger earlier in their trading session, but the news out of Spain saw all their gains lost. Germany's DAX was down 0.3% and the FTSE posted a small loss of 0.1%. We could see more price action and movements in the currency and markets tonight as the majority of the major participants return to the market.

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