The Dollar consolidated on Tuesday while short-term interest rates eased following aggressive steps by global authorities to pump cash into troubled banks to resolve the credit crisis.

The United States said it would inject $250 billion into banks, including the country's nine largest. The move followed similar initiatives in Britain, France and Germany. As a result there was some improvement in risk appetite, causing investors to unwind some safe-haven trades in both the Dollar and the Yen. Such correction in the Dollar was not surprising given the recent rally.

Data on Tuesday from Germany's ZEW research institute showed a bigger-than-expected slide in investor sentiment in October, suggesting the euro zone's top economy may be in for a prolonged slump. Analysts said they expected the European Central Bank to cut interest rates through 2009 to about 2.5% and the Federal Reserve to ease by another 50bp to 1%, which should narrow the Euro's yield appeal. ...More...


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