The dollar was sliding against the yen and the euro Monday after another economic report fell short of consensus expectations.
Euros were trading for $1.3884, up from $1.3878 late Friday. Dollars were selling for 114.97 yen, down from 115.30 yen in the last trading session.
The New York
Empire State Manufacturing Index recorded a larger-than-expected drop in September, providing more evidence of a slowing economy.
"The index rests at an inflection, driving home the question for the Fed as to whether the economy is merely moderating or headed for a substantial slowdown," writes T.J. Marta, a fixed-income strategist at RBC Capital Markets in New York, in a market brief.
The Fed is widely expected to lower the cost of borrowing when it's Federal Open Market Committee publishes its policy statement Tuesday, with the only uncertainty being whether interest rates will be cut by a quarter-point or a half-point.
The fed funds rate is what banks charge each other to borrow money overnight.
Elsewhere, the dollar was strengthening against the pound as confidence in the struggling U.K. mortgage lender
continued to wane and the firm's stock tumbled 40%, taking with it others in the banking sector.
British pounds were changing hands for $2.0017, down from $2.0068 previously, on worries that the wider British economy would be hurt by the banking crisis.
The exchange-traded funds that track the value of the major currencies were moving in line with the action in the foreign-exchange markets.
CurrencyShares British Pound Sterling Trust
was off 0.2%, while the
CurrencyShares Japanese Yen Trust
was ahead by 0.3%. The
CurrencyShares Euro Trust
was up marginally.