Dollar hits record against the Swiss Franc as stock markets tumble (Reuters) (16-01-2008)

LONDON, Jan 16 (Reuters) - The dollar hit a 2-1/2 year low against the yen and a record trough versus the Swiss franc on Wednesday, as weak data leads to growing fears of a U.S. recession and expectations of hefty Federal Reserve interest rate cuts.

A dismal reading of December retail sales on Tuesday suggested the U.S. economy might be facing deeper problems, and tumbling global stock markets fuelled market expectations that the Fed is set to cut rates by as much as 75 basis points soon.

At 0903 GMT the dollar was down 0.5 percent against the yen at 106.15 yen, having fallen to 105.97 yen, the lowest since May 2005. The dollar fell as low as 1.0839 Swiss francs, an all-time trough.

The greenback was relatively resilient against the euro, holding steady at $1.4816. The euro slid 0.6 percent to 157.09 yen, a four-month low, before recovering slightly.

Fed Chairman Ben Bernanke's comments last week that the central bank was willing to take "substantive additional action" to maintain growth cemented expectations of a half percentage point cut in the Fed's benchmark interest rate, currently 4.25 percent, at its scheduled meeting on Jan. 29-30.

U.S. interest rate futures markets were reflecting a 50-50 chance of the Fed lowering interest rates by three-quarters of a percentage point by the end of this month FEDWATCH.

Market players will be watching more U.S. data this week that could further boost expectations for a hefty Fed rate cut.

Data due this session includes the December consumer price index at 1330 GMT. The median forecast among economists is for a rise of 0.2 percent in the headline CPI, or a year-on-year gain of 4.1 percent.

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