22 May 2001, 17:01 US FX Daily Outlook: Euro hits new year low on Ifo, outflows
By Cornelius Luca
New York, May 22 (BridgeNews) - The euro stumbled to a six-month low
of 86.63 cents to the dollar following a poor reading of the Ifo index of
west German business sentiment for the eleventh consecutive month and on
expected cash outflows in the second half of the year. Fears of outflows
were rekindled by Morgan Stanley Capital International, which re-weighted
on Saturday its global indices this weekend in favor of U.S. and U.K.
stocks at the expense of euro-zone assets, and UBS Warburg research, which
showed Continental Europe losing over $1 billion of net outflows last
week.
* * *
Euro/dollar's not so surprising slide has been accelerated by demand
for dollar/Swiss franc, which hit a six-month high of 1.7694 on talk that
Swiss firm Nestle's $10.3 billion purchase of U.S.' Ralston Purina was
getting implemented.
Sterling/dollar fell to a four-day low on profit taking and under the
weight of the euro/dollar after peaking Monday at a 17-day high of
$1.4414.
Dollar/yen extended its sideways performance, erasing some of its
Monday's light losses while still loitering within Friday's range.
Meanwhile, dollar/Canada climbed as high as 1.5417, a six-day high, before
trimming gains.
The domestic event agenda is saturated with speeches by Fed officials
-- Philadelphia Fed Bank President Anthony Santomero, Minneapolis Fed Bank
President Gary Stern, New York Fed Bank President William McDonough, and
Federal Reserve Governor Edward Kelley. Also speaking Tuesday are Lawrence
Lindsey, assistant to the president for economic policy, and U.S. Treasury
Secretary Paul O'Neill. They are all likely to offer cautiously
encouraging views about the capacity of the U.S. economy to bounce from
its current slowdown.
The dollar remains in favor across the board, with the European
currencies at the losing end.
Current Previous Change Global Global
NY open NY close low high
USD/JPY 123.17 122.67 0.50 122.54 123.35
EUR/USD 0.8667 0.8772 -0.0087 0.8663 0.8776
EUR/JPY 106.68 107.55 -0.58 106.62 107.90
GBP/USD 1.4285 1.4398 -0.0096 1.4284 1.4404
USD/CHF 1.7679 1.7475 0.0162 1.7465 1.7694
USD/CAD 1.5396 1.5368 0.0028 1.5355 1.5417
AUD/USD 0.5231 0.5264 -0.0033 0.5228 0.5276
NZD/USD 0.4243 0.4256 -0.0013 0.4242 0.4273
SP.1 1317.20 2.70 1311.60 1317.30
ND.1 2081.50 29.50 2038.00 2081.50
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