Bell FX Currency Outlook: The Australian Dollar continued to firm slowly last night in what was a relatively quiet session amongst a positive night for equity markets.

Australia: European markets were higher despite another 2% decline in Spanish stocks and there were gains in US stocks despite a disappointing May read from the Conference Board consumer confidence survey.

Yesterday was a pretty strong day for Asian markets on speculation the Chinese Government would soon announce economic support measures.

The Chinese press agency, Xinhua, however, quashed reports of a grand fiscal stimulus. Local daily China Daily News reported that the National Development and Reform Commission (NDRC), China's top planning agency, recently approved a 70-billion-yuan steel project that is to be built in Zhanjiang, Guangdong province.

This project, according to China Daily, which has been delayed eight years since its plans were first submitted for approval, will commence construction in late May. The NDRC website also indicated that it has passed the approval of 100 infrastructure projects as of 21 May.

In Australia today, retail sales for April is expected to show a decline of 0.3%. Construction work done for the March quarter is due where it is expected we will see strong resource-engineering work offset by soft domestic building.

Looking to the AUD, we feel there is good support for it at the minute. Reports are that the CME futures market speculative traders have
never been so short, drawing the conclusion the market is oversold (or becoming so), making the AUD vulnerable to a rebound.

Majors: As written above it was a reasonably quiet night in FX markets. US equities absorbed slightly weaker than expected US dataflow and Egan Jones' downgrade of Spain. European equities were bid, although note the markets did close before the announcement of the Spanish downgrade.

Despite this downgrade, Spanish 10-year yields fell as did Portugal's. Tonight, UK money supply / mortgage approvals data for April
is due along with Euro-zone business and consumer confidence for May. US pending home sales for April are due, and the markets will closely watch Italy's scheduled auction of EUR6.5 billion in 5 and 10 year government bonds.

Economic Calendar
30 MAY AUS Retail Sales Apr
EU Eurozone Consumer Confidence May
US Pending Home Sales Apr