US dollar, yen weaker

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The US Federal Reserve announced Tuesday afternoon that it had cut the main interest rate by 0.5 percent to 4.75 percent, the first time it has been reduced in over four years.

The rate cut sent the US dollar to a new all-time low of $1.3964 in relation to the euro, and while the greenback took back some of that loss later it was still 0.5 percent lower by mid-afternoon in New York to $1.3940 to the euro.

While the greenback added 0.8 percent to ¥115.95 versus the yen, it was down 0.6 percent to $2.0080 against sterling and fell 0.8 percent to C$1.0190 versus the Canadian dollar, a new 30-year low.

The dollar was not the only currency that saw gains against the yen.

The Japanese currency was 1.2 percent lower to ¥82.23 in relation to the New Zealand dollar, while it dropped 1.3 percent to ¥161.60 against the euro and was down 1.6 percent to ¥233.05 versus sterling.

The UK currency, meanwhile dropped to a year-and-a-half low in relation to the shared currency at £0.6973 before taking back to loss to manage a gain of 0.1 percent versus the euro to £0.6942

The drop in the pound came after UK inflation fell again in August, giving the Bank of England an excuse to cut interest rates there, but some analysts said that the government response to issues surrounding Northern Rock (LSE: NRK) and other banks was helping the currency.