Dollar is weak, FOMC minutes on Focus

The yen held gains against the dollar and Euro yesterday and climbed against high yielders after more trouble in the U.S. sub-prime mortgage and credit markets kept investors cautious about risky carry trades. The dollar is trading around the levels of 1.4730 against the Euro, around the levels of 110.40 against the Yen and around the levels of 2.0595 against the sterling.

The dollar hovered near an 18-month low against the Japanese currency, after Goldman Sachs on Monday downgraded Citigroup's stock to "sell" from neutral", and forecast more write-downs by the largest U.S. bank because of mortgage losses. A 1.9 percent fall in the Nikkei stocks average to a 16-month low, after U.S. equities hit their weakest levels in three months on Monday, also supported the yen as investors used stock movements as a barometer of risk appetite.

The downgrade of Citigroup, which Goldman said may have to write off $15 billion over the next two quarters, underlined the ongoing credit problems that are reverberating through the financial world, threatening to affect the broader U.S. economy and keeping intact speculation of lower U.S. interest rates."The yen strength trend is continuing," reported from Finotec dealing desk. "We're going to need some new factors to turn this trend around,” added. Market participants say the yen is poised for more gains in the near term, with some saying that a push below the 109 yen region may trigger dollar selling to as low as around 105 yen.

The single European currency was down 0.15 percent at 160.65 yen, pulling away from the day's high around 161.30 yen as Nikkei losses deepened throughout the morning session. Traders said this helped to push the euro down from the day's high around $1.4673 to a session low around $1.4635, around 0.2 percent lower on the day.

The Fed will disclose updated forecasts from policymakers. In the past, such forecasts were announced twice a year, but the Fed will begin releasing them quarterly and in an expanded format that will provide more details on its outlook. Many in the market are expecting more Fed rate cuts, although recent comments from several policymakers have hinted that the central bank sees no need for further easing yet.

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