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Dollar falls to record euro low Dollar falls to record euro low
(about 11 hours later)
The dollar has fallen to a fresh record low against the euro, after weak economic data renewed fears that the US economy may be facing recession. The US dollar has fallen to a fresh record low against the euro as traders bet that further interest rate cuts will be needed to stem a US recession.
After figures showed a sharp rise in US home foreclosures and another fall in American consumer confidence, the euro hit an all-time high of $1.50. The euro rose to $1.5048 after hitting $1.50 on Tuesday for the first time.
Traders say the Federal Reserve may have to cut interest rates again, which would further undermine the dollar. Data issued on Tuesday, showing a sharp rise in US home foreclosures and another fall in American consumer confidence, weighed on sentiment.
Meanwhile, US crude oil rose $2.20 to a fresh record of $101.43 a barrel. Lower US rates tend to send investors in search of other currencies which give a better rate of return.
"Inflation - or perhaps more to the point, stagflation - remains a concern for the Fed," said Gary Thomson, an analyst at CMC Markets.
Five-year lowFive-year low
The latest sign of falling US consumer confidence came from the closely watched Conference Board survey. The latest sign of falling US consumer confidence came from the closely-watched Conference Board survey.
The outlook for the economy continues to worsen and the risk of a recession continues to increase Conference Board's Lynn Franco It said consumer sentiment fell to a five-year low in February because of growing recession fears.
It said consumer sentiment fell to a five-year low in February due to growing recession fears. At the same time, the number of US homes facing foreclosure rose 57% in January, compared with the same month of 2007.
At the same time, the number of US homes facing foreclosure rose 57% in January compared with the same month of 2007. Last month, the Fed slashed interest rates to 3% as it tried to prevent the US economy falling into recession.
Last month the Fed slashed interest rates to 3% as it tried to prevent the US economy falling into recession. "With so few consumers expecting conditions to turn around in the months ahead, the outlook for the economy continues to worsen and the risk of a recession continues to increase," said Lynn Franco, a director of the Conference Board's consumer research centre.
"With so few consumers expecting conditions to turnaround in the months ahead, the outlook for the economy continues to worsen and the risk of a recession continues to increase," said Lynn Franco, a director of the Conference Board's consumer research centre.
US interest rate cuts generally lower the value of the dollar as traders move to currencies with a higher rate of return.