The US dollar descended to new long-term lows Monday against several widely traded currencies

Previous session overview
The US dollar descended to new long-term lows Monday against several widely traded currencies, including the euro and Canadian dollar, as investors pondered the likelihood of a reduction in benchmark U.S. interest rates. Ahead of the decision Wednesday by the rate-setting Federal Open Market Committee, the greenback stayed mostly range-bound in New York trading - although those ranges were in record-low territory.

The euro hit an all-time high of $1.4439 during the overnight session. A climb in oil future and gold prices also hurt the dollar. The strength of commodities helped the Canadian dollar advance towards its 37-year high Monday. The Canadian unit has appreciated a total 22% since the beginning of the year.

Sterling traded at three-month highs against the dollar on news that consumer lending in the U.K. shot up to year-high levels, signaling that the recent slew of discouraging U.S. economic reports are primarily of U.S. concern. The pound remained within striking distance of the 26-year highs it reached in July.

The Australian dollar pressed to a fresh 23-year high at 0.9272, mainly on expectations the Reserve Bank of Australia will raise interest rates, said analysts.

Late Monday afternoon during American session, the euro was at $1.4425 from $1.4390 late Friday, while the dollar was at Y114.61 from Y114.22. The euro was at Y165.36 from Y164.37. The U.K. pound was at $2.0630 from $2.0530, according to SWFX. The dollar was quoted at CHF1.1643 from CHF1.1640.

Despite overall dollar weakness, the yen emerged as Monday's overall loser on a spike of risk appetite that followed a rise in global equities markets. The Dow Jones Industrial Average was up about 62 points near the close of U.S. trading. The Federal Reserve is expected to trim its benchmark rate from 4.75% to 4.50%. Some analysts even suggest the Fed may cut down to 4.25%. Low rates means lower returns for investors and tend to hurt the appeal of the dollar for investors. Last month, the Fed cut interest rates by 50 basis points, its first reduction in more than four years, kicking the dollar on a fast slope down.

Market expectation
The dollar and other major currencies slipped against the yen in Asia on Tuesday as investors cut their holdings ahead of the U.S. Federal Reserve's interest rate decision Wednesday. A report in Tuesday's Wall Street Journal, which said the Fed might hold rates steady, was the trigger, traders said. Should the Federal Open Market Committee keep rates unchanged, this could cause the U.S. stock market to tumble and spark dollar-selling.

Today, the market can take another look at the housing market situation with the S&P/Case-Schiller composite house prices and there is also the consumer confidence, which will attract attention as the final Michigan consumer confidence further dipped.