The dollar began this week on the back foot again as traders continue to price in another interest rate cut when the Fed convenes tomorrow. In Asian trading, the greenback slumped to a three-month low against the sterling and a new all-time low versus the euro.

GBP
The sterling hit a three-month high against the dollar but fell again versus the euro as investors began to price in the probability that the BoE would be the next major CB to countenance an interest rate cut. With mortgage approvals falling for the fourth consecutive month, there is now a growing consensus that a monetary policy easing is expected in early 2008.

USD
With the Fed widely expected to cut US interest rates at its next meeting, the dollar has been heavily sold off, and now lies low against other major currencies. Ongoing problems in the housing and credit markets have served only to expose weakness in the US economy. Analysts say a further reduction to at least 4.5 per cent, or even 4.25 per cent is likely.

EUR
The euro hit yet another all-time high versus the dollar as investors continued backing the euro and the probability of an interest rate rise in the foreseeable future. Irrespective of the German CPI figure due out, most investors expect the euro to continue to benefit from persistent weakness in the US dollar.

JPY
Japanese core consumer prices fell in September from a year earlier marking the eighth straight month of decline, doing little to move interest rates. Investors will now wait for the BoJ's outlook report on the economy and price stability due out as they assess the possibility of a rate hike early next year.

Commercial Foreign Exchange Travelex Malta (Free phone: 800 77 33 22) www.travelex.com/mt/

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