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.
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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