Dollar opens marginally higher

THE Australian dollar has opened marginally higher as the Cyprus bailout deadline approaches.

At 7am AEDT today, the Australian dollar was trading at 104.38 US cents, up slightly from Friday's local close of 104.26 US cents. During the weekend offshore session, the currency traded in a narrow range between a low of 104.22 US cents and a high of 104.58 US cents.

The euro remained under pressure during overseas trading, as market players focused on the latest developments in Cyprus.

Cyprus faces the prospect of losing a 10 billion euro bailout package if the Mediterranean island nation cannot agree to terms with the European Central Bank. While legislators in Cyprus rejected a proposed levy on all bank deposits last week, they were now considering a levy on all deposits over 100,000 euros to raise the 5.8 billion euros required. The situation in Cyprus was being discussed by a gathering of European finance ministers at a gathering in Finland.

"They are expected to make an announcement in the next 24 hours about the bailout deal," HiFX senior dealer Dan Bell said. "That will be the focus for the markets today."

"There is not a lot to report on the local front, so we will be watching the headlines coming out of Europe."

A deal between Cyprus and Europe over a bailout package was expected to be positive for the Australian dollar, Mr Bell said, with the currency potentially able to push through 104.5 US cents.

Mr Bell said the worries from Cyprus offset a positive night on Wall Street, where the S&P500 gained 0.72 per cent.

There are no domestic data releases scheduled from today.

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