By Cornelius Luca
New York, July 10 (BridgeNews) - The euro added to its Monday gains to reach a 12-day high of 85.62 cents to the dollar despite ongoing concerns that the euro-zone economy will soften in the medium term. Presenting the lowest economic growth forecast issued by a leading research institute so far, Berlin-based think-tank DIW lowered its German economic growth outlook to 1.0% for this year from 2.1%, and to 2.3% for next year. The institute called upon the European Central Bank (ECB) to stimulate growth with interest rate cuts.
Sterling/dollar slipped from a one-week high of 1.4133, dollar/Swiss franc fell to a 12-day low of 1.7805, while dollar/Canada rose for the third consecutive session to a high of 1.5233.
Dollar/yen rebounded from a five-day low of 125.22 in part due to International Monetary Fund First Deputy Managing Director Stanley Fischer's comments that a weaker yen and further monetary easing would help Japan's economy. Fischer added that Japan should gradually back off from fiscal stimulus in light of its huge public debt.
In other news, Reserve Bank of Australia Governor Ian Macfarlane said the threat of severe global slowdown was the major risk to the outlook for interest rates. He said the domestic economy had gained renewed momentum, but added the bank would not hesitate to ease interest rates again if the global economy deteriorated beyond current expectations. Macfarlane said the threat of a major global slowdown was lower now compared to conditions as recently as March.
There are no domestic events scheduled for release Tuesday, so direction will continue to be provided by short-term flows. The key levels to watch are 0.8533 for euro/dollar and 125.50 for dollar/yen.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 125.58 125.25 0.33 125.22 125.89
EUR/USD 0.8547 0.8506 0.0041 0.8491 0.8562
EUR/JPY 107.32 106.63 0.69 106.45 107.50
GBP/USD 1.4103 1.4092 0.0011 1.4082 1.4133
USD/CHF 1.7831 1.7928 -0.0097 1.7805 1.7950
USD/CAD 1.5230 1.5209 0.0021 1.5195 1.5236
AUD/USD 0.5115 0.5110 0.0005 0.5092 0.5132
NZD/USD 0.4078 0.4069 0.0009 0.4065 0.4087
SP.1 1206.60 6.40 1201.60 1206.60
ND.1 1725.00 25.00 1703.00 1726.00