The Dollar fell on Monday for the first time in three sessions as oil prices hit a record high, sparking debate about the strength of the US economy. Federal Reserve survey showing the banking sector remained in the grips of a credit crunch.
After trimming interest rates to 2% last week, the Federal Reserve hinted it may move to the sidelines and pause its aggressive seven-month easing campaign that has reduced the Dollar's appeal to global investors. The Fed next meets on June 24-25 and federal funds futures contracts were on Monday pricing in just a 12% chance of another 25bp rate cut to 1.75%.
ECB President Jean-Claude Trichet warned again on Monday of "significant" inflation risks, suggesting benchmark rates would likely stay fixed at 4% when the central bank meets on Thursday.
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