The Dollar was little changed yesterday and is expected to register its first monthly advance against the Euro on speculation that any cut in interest rates by the Fed today will be followed by a policy statement indicating the central bank will pause its aggressive measures. The US currency also poised for its monthly record high against the Yen since April 2004, based on the expectation that the Federal Reserve will low borrowing costs from 2.25% to 2% and then keep rates on hold. The Dollar traded at 1.5596 against the Euro and at 103.80 against the Yen at 8:00am GMT. The major risk for the Dollar is that the Fed statement is not as hawkish as investors predicted. 'They've got to leave the door open to more cuts. So there's a risk of the Dollar selling off. But there's a lot of other bad news in the world showing the global economy is slowing', said Gerrard Katz, head of North Asia currency trading at Standard Chartered in Hong Kong. Based on a forecast of 41 analysts surveyed by Bloomberg News, the Dollar will trade at $1.58 against the Euro by the end of June and will advance to $1.49 by the end of the year.

Although Asian stocks fell, which usually pushes the Yen up, the Japanese currency is expected to slump today, as the Bank of Japan cuts economical growth forecast. Yen traded at 161.81 against the Euro at 8:00am GMT. Government reports today showed Japan's industrial production dropped more than economists predicted in March and new job offers fell by 21 percent from a year ago. BOJ revealed today that economy will grow 1.5 percent in the year ending in March 31, 0.6 pp less than the previous estimation; also, core consumer prices, excluding fresh food, will rise 1.1 percent this year, higher than the previous forecast of 0.4 percent. Japanese economy, the world's number 2, is weakening and inflation is accelerating, stopping BOJ from move interest rates. 'There is no catalyst for yen-buying', said Yuji Kameoka, a senior economist and currency analyst at Daiwa Institute of Research in Tokyo, a unit of Japan's second-largest brokerage.

The Pound slumped yesterday, as consumer sentiment was revealed worse than expectations, hitting a 16-year low. The British currency traded at 0.7939 against the Euro and at 1.9650 against the Dollar at 8:00am GMT. Also, early today house prices were revealed in the UK, revealing a drop of 1.1 percent. Higher mortgage rates and tighter lending criteria leaded buyers to stay away from the property market in April. Dropping house prices leads consumers to become more cautious about their spending, which contributes to the economical slow down. Furthermore, with low inflation and economical slump, a cut in British interest rates is expected, since it boosts economy and increases prices. Consumer Confidence in the Euro zone will be revealed today, which has a major impact in the economical development, since optimistic consumers spend more, boosting the economy and, therefore, pushing the currency up. Euro zone unemployment rate will also be known, which is expected to remain in its level of 7.1 percent.

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