The dollar is largely down today against other major currencies, as misconstrued comments from Treasury Secretary

Paul O'Neill

hurt the dollar earlier, and then economic data out of the U.S. pushed it down further.

O'Neill was quoted in an interview from a German newspaper as saying that the U.S. would stop pursuing its strong dollar policy, which it previously had promised to do. The dollar began to slip as a result of the quotation, but the

Treasury Department

quickly intervened by saying that the information was incorrect, which gave the dollar back some legs this morning.

Then the first in a series of data today was the January

Producer Price Index, or PPI, which came in at a whopping 1.1% increase, well above the expected 0.3% rise. It is the fastest month-to-month rise in the PPI in over a decade. The PPI for the previous month was a mere 0.2%. In a statement released today, the

Fed suggested that as a result of a possible threat of inflation now, they will take a more cautious approach to cutting interest rates, according to

Reuters

. The Fed has cut interest rates twice since the start of the year, by 50 basis points each time.

After gaining on the euro all week, the dollar is down against the European single-currency today. The euro was recently trading up strong for $0.9143, from yesterday's close of $0.9044.

As a result of continued repatriation of Japanese funds ahead of the fiscal year-end, the yen continued to strengthen against the dollar today. Also helping the yen to climb on the dollar -- besides the U.S. PPI numbers -- is a rumor that Japanese Prime Minister

Yoshiru Mori

may step down from office, as early as next month. The current government is blamed in large part for the weak yen and weaker economy; a change of officers is hoped to lead to an economic turnaround in Japan.

The dollar was lately down on the yen, trading for 115.22 yen per dollar from yesterday's close of 115.36 yen per dollar.

The euro's strength against the dollar today is likely the cause for its strength against the yen; it was dragged up to the recent level of 105.32 yen per euro, nearly a full yen above yesterday's closing price. The euro closed yesterday at 104.33 yen per euro.

The dollar was falling recently against other major world currencies. The British pound was up of late on the dollar, trading at $0.4527, up slightly from $1.4493 at the close of trading yesterday.

The Australian dollar was also moving up on the U.S. currency of late, trading at $0.5277, after having closed trading yesterday at $0.5236.

In a battle of the lesser of two evils, news from Canada is pulling its currency down in value against the U.S. dollar. After Canadian-based

Nortel Networks

warned yesterday of a sharp earnings shortfall, underpinning fears that the Canadian economy was bound to follow the U.S. in a steep economic slowdown, the Canadian dollar has been losing strength against the U.S. dollar today. The U.S. dollar was recently trading at C$1.5348, near 10-week highs and up from yesterday's close of C$1.5281.

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