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Dollar up as U.S. rate cut bets trimmed slightly Simon Falush The dollar recovered from record lows against the euro and a basket of major currencies on Tuesday as investors marginally trimmed expectations the Federal Reserve will cut interest rates this week to boost growth. The Fed is widely seen lowering rates by a quarter-point to 4.5 percent after a two-day meeting ending on Wednesday to prevent broader damage to the U.S. economy from deterioration in the housing sector. However the dollar benefited a little from a Wall Street Journal report on Tuesday that said a Fed rate cut this week is no sure thing and officials are not seriously considering a half-point cut.
"We're in a pattern of wait-and-see ahead of the FOMC decision," said Michael Klawitter, currency strategist at Dresdner Kleinwort in Frankfurt. "There's been a bit of back-tracking on expectations of a cut so there has been some profit taking." The article by Greg Ip, the WSJ's Fed watcher who is known for reflecting the views of senior central bankers, said policymakers view this week's decision as a choice between a quarter-point cut to 4.5 percent and not moving at all. Some market players were also taking profits on winning bets against the dollar and in higher-yielding currencies before the Fed meeting and this week's data on U.S. payrolls, traders said.
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