Dollar declined on Fed minutes (Reuters) (09-04-2008)

LONDON, April 9 (Reuters) - The dollar lost some ground on Wednesday as investors took in the information from the Federal Reserve’s latest meeting, which reflected the continued weakness in the U.S. economy, with the accompanying inflation risks.

The U.K. pound reached a record low against the euro, as a fall in UK consumer sentiment highlighted escalating troubles in the economy, reinforcing expectations of a BoE rate cut on Thursday.

A slight recovery in the dollar versus the euro from last week has petered out, and traders prodded the U.S. currency lower after minutes from the Fed's last policy meeting showed that some central bankers believed "a prolonged and severe economic downturn could not be ruled out".

The European Central Bank is expected to keep rates steady at 4 percent after its policy meeting on Thursday, turning investor attention to the Group of Seven finance officials meeting on Friday.

The euro was steady at $1.5705, staying well above a one-week low hit last week at $1.5509.

The dollar fell 0.2 percent to 102.36 yen, reversing earlier gains that took it near a one-month high.

FOMC minutes released on Tuesday showed that the Fed remains concerned about further restrictions on credit availability and ongoing weakness in the U.S. housing market, underscoring market expectations for further Fed rate cuts.

 Source: Reuters