Dollar falls ahead of key US data

The dollar has been hit by fears over the US economy

The dollar has edged towards seven-week lows against both the yen and the euro on fears of poor US retail sales data and banking results later on Tuesday.

With any weak figures set to increase expectations of a further cut in US interest rates, the dollar had fallen to 107.75 yen in early trading.

Against the European single currency, one euro was worth $1.4876, up from $1.4869 on Monday.

Reports say banking giant Citigroup could report $20bn (£10bn) of bad debt.

Recession fears

Citigroup will be the first major US bank to release its results for the last three months of 2007, and its figures will give another snapshot of the banking sector's exposure to the crisis in the US sub-prime mortgage sector.

Some reports suggest Citigroup could also announce job cuts of more than 20,000.

"The numbers for write-downs and job cuts at Citi could heighten worries about banking sector problems and their impact on the economy, if confirmed," said Kengo Suzuki, a currency strategist at Shinko Securities.

Investment bank Goldman Sachs has already predicted that the US economy will fall into recession in 2008, and analysts are also nervously awaiting the release of retail sales data for December.

As consumer spending accounts for two-thirds of the US economy, the figure may indicate whether Goldman's fears are correct.

In December, the US Federal Reserve cut interest rates for the third time in succession to 4.25%, as it tried to help steer the world's largest economy through the continuing housing slump and credit market woes.