UPDATES ON JULY 16 2008

JULY 16 WEDNESDAY

Dollar Trades Near Record Low as U.S. Banks May Report Losses .

The dollar traded near a record low against the euro on

speculation U.S. banks will report further losses this week,

eroding confidence in the financial system of the world's

largest economy.

The U.S. currency was also near a six-week low versus the yen .

The dollar traded at $1.5897 per euro at 1:42 p.m. in Tokyo,

after touching $1.6038 yesterday, the weakest since the

15- nation currency's 1999 debut. The dollar bought 104.64

yen, after reaching 104.16 yesterday, the lowest since June 3.

Japan's currency traded at 166.35 per euro from 166.65.

The dollar may fall to $1.5920 versus the euro and

104.40 yen today.

Federal funds futures on the Chicago Board of Trade show a

7 percent chance that the Fed will increase the 2 percent

target lending rate at its Aug. 5 meeting, compared with

77 percent odds a month ago.

The Dollar Index, which tracks the greenback against the

currencies of six U.S. trading partners, fell for a sixth day,

dropping 0.2 percent to 71.71.

The U.S. currency has given up most of the gains made

versus the euro since July 3.

It has since slumped 1.2 percent on concern that losses at

Fannie Mae and Freddie Mac will deepen.

Investors increased net long positions on the U.S. currency

to a four-month high of 105,990 contracts, and on the

euro to a five-month high of 20,869 contracts. A long

position is a bet that an asset price will rise.

The U.S. currency is poised to slide as the relative

strength index, a comparison of the magnitude of gains

and losses, shows the dollar is losing momentum.

The dollar's 14-day relative strength index against the yen,

was 37.3 today, down from 46.4 on July 14 and

51.6 a week ago.