Bell FX Currency Outlook: Europe's woes and weaker
US data released overnight drives the Australian Dollar
to yearly lows.

Australia: The local unit traded to a low of USD0.9673 during yesterday's trading session, as safe haven flows into the USD and treasury's continued. US stocks ended what was the worst month since September as investor sentiment continues to wane on Europe's deepening credit problems.

Spain has been at the centre of the latest European developments, as markets begin to speculate whether the troubled Spanish banks will need outside help. Sentiment improved later in the session on reports the IMF is considering a loan to assist in the bailout of Bankia; one of Spain's largest banks.

The AUD found some footing as the US dollar reversed against the Euro to open back above USD0.9700 this morning. There is no local data due today and we expect the AUD to continue to trend lower.

Markets will keenly await the RBA meeting next week for hints of any future rate cuts.

Majors: Disappointing jobless claims and PMI date out of the US added to sinking investor sentiment, as US equities closed the worst month seen this year.

The S&P500 has fallen 6.3% in May, with the DJIA dropping 6.2% and the Nasdaq clocking a 7.2% drop, their largest monthly declines in two years.

The Chicago PMI read was weaker than expected, falling to 52.7 from 56.2 vs. an expected 56.8. Initial US jobless rose to 383k from
373k last week, presenting a downside risk for non-farm payoll figures due out tonight.

European equities were mixed overnight with the FTSE rising 0.4% to 5,321 whilst the German DAX fell 0.3% to 6,264.

Oil prices continued lower on the European debt concerns with WTI futures falling 1.5% to USD 886.53 per barrel and Brent falling 1.6% to USD 101.83 per barrel. Gold ended the session little changed, 0.2% lower at USD 1560.48 per ounce.

Economic Calendar
1 JUNE AU AIG Performance of Manufacturing Index MAY
CH PMI Manufacturing MAY
US Change in Non-Farm Payrolls MAY
EU PMI Manufacturing