» Forex - Dollar fell as oil prices hit record high and worries for more corporate fallout from credit crunch

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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