Bell FX Currency Outlook: The Australian dollar has come under intense selling pressure overnight as a result of the ongoing Euro-zone debt crisis.

Australia: The market focus shifted to Spain overnight, with fears growing over the health of the Spanish banks. Given the fear driven sentiment, investors retreated to the traditional safe haven currencies, the USD and JPY, forcing the commodity currencies, such as the AUD and NZD, sharply lower.

The AUD is trading around USD0.9700 this morning and looking vulnerable to further losses today. We have some local data due for release today, including Private Capital Expenditure, building approvals and private sector credit data, but these announcements are expected to have little effect on the market as offshore developments remain the primary focus.

As long as the EUR continues to take a beating against the USD, it seems likely the AUD will continue to pull back.

Majors: The situation in Europe just seems to go from bad to worse, with Spain now looking increasingly vulnerable. Spanish plans to use central bank funds to recapitalise one of their troubled lenders has been denied by the ECB, raising concerns about the health of the Spanish financial system and sending their bond yields sharply higher. Italy's bond yields were also higher after a government bond sale failed to meet issue targets.

Also overnight, a new poll in Greece showed the anti-austerity parties are gaining ground ahead of the June 17 Greek elections. These latest developments sparked sell offs in global equity markets, with the DAX down 1.8%, the FTSE down 1.7% and the Dow down to close 1.3%. Given the overnight moves, Asian equity markets are expected to fall throughout today's trading session.

Economic Calendar
31 MAY AU Building Approvals APR
AU CAPEX 1Q
EU Euro-zone CPI Estimate MAY
US ADP Employment Change MAY