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 Markets expect the Fed to cut interest rates from their current level of 4.75 percent on Wednesday
-- adding to an unexpectedly bold half-point cut last month.
Although lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.
The euro has been climbing steadily against the dollar, regularly touching new highs since August amid fears over the health of the U.S. economy
-- worries stoked by the subprime credit crisis and increasingly disappointing economic reports.
The euro's rise, which makes goods from the U.S. much cheaper to buy, can hurt exports from countries that use the currency, among them Germany and France.
On Tuesday, the British pound bought $2.0575, down from $2.0619, its highest point since July, on Monday. The dollar fell against the Japanese currency, too, slipping to 114.43 yen from 114.59 yen.
[The Associated Press]
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