Amid expectations of another cut in U.S. interest rates Tuesday, the dollar was notching across-the-board gains this morning, reaching a two-week high against the yen and a one-month peak against the euro.

The dollar was fetching 123.09 yen, up from 122.52 yen in trading late Friday. Meanwhile, the euro slipped to $0.8743, down from $0.8751 at last Friday's close.

The U.S.

Federal Open Market Committee is still largely expected to lower key domestic interest rates by 50 basis points to 4% when it meets Tuesday, but the markets are pricing in a slim chance of a cut of 25 basis points.

Meanwhile, the currency markets are still feeling the effects of the

European Central Bank's

rate cut last Thursday. The ECB surprised the trading community when it slashed its key rates by 50 basis points -- the first reduction in more than two years by the ECB -- after widely suggesting that cuts weren't in the offing.

The euro has retreated since its recent peak above 89 cents immediately following the ECB rate cut. Europe's single currency is slipping only marginally against the yen today, easing to 107.61 yen per euro from 107.66 yen per euro at last close.

The yen's weakness this morning was attributed to losses in the Japanese

Nikkei 225

stock index overnight, in addition to the rate-cut hopes.

The British pound fell just slightly against the dollar, trading most recently for $1.4181, down from $1.4186 at last close. The U.S. buck traded up against the rest of the dollar bloc also this morning, climbing to C$1.5522 from C$1.5502 at last close. The Australian dollar slipped to $0.5172 most recently, from $0.5215 at Friday's close.

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